Credit cards, from the outset, are a dangerous idea for the average consumer. They encourage an individual to spend more money than they have in their possession, often on things that they would not choose to purchase if they did not have a card available to them. Because people tend to be naturally optimistic, they anticipate that they will be able to make their payments on time without fail and they fail to consider the potential for other circumstances to arise that derail that plan. The companies that issue them,, on the other hand, count on that.
While credit card companies recoup a small percentage of each transaction that uses one of their cards, the real moneymakers for them are the interest charged on purchases and the penalties and fees that are assessed for going over the limit or making a late payment. Though there have recently been some sincere efforts in the national legislature to hold credit card companies to a more reasonable standard of accountability, the fact remains that many consumers fall prey to fine print and arbitrary decisions that a credit card company issues which affect the balances of customer accounts.
How to Contend with the Problem
Although the deck is stacked against consumers by the companies and banks that issue cards, there are some purchases or transactions that effectively require an individual to have a major credit card. Most rental car companies, for example, require that a deposit be held on one and they will not even accept cash payments. Additionally, keeping at least one revolving account and establishing a positive payment history (while keeping the balance low) is an important part of building a good credit score that can benefit you in many ways.
Since credit cards have become something of a necessity, though it might be more responsible from a standpoint of immediate financial circumstance to avoid them altogether, it is instead a wiser choice to take steps to proactively secure and protect an account. Some helpful tips for contending with this financial mess are as follows:
- Set aside cash for the transactions that you conduct with your credit card
- Send your payments early so that you do not risk postal delays
- Pay more than the monthly minimum payment due
- Choose your card carefully so that you do not become saddled with excessive fees or interest rates.