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10 Things to Consider Before Stacking up on Credit Cards as a Parent

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Credit cards are basically a payment card issued to the users so that the cardholder can pay a particular amount for goods and services based on the cardholder’s promise to the card issuer. It is important to understand that credit cards are not at all debit cards. Can you people distinguish a credit card from a debit card? Debit cards help you draw money directly from your bank account, but you can draw money depending on your bank balance, but credit cards have a limit, and hence you can take the risk of spending as much as you can. In Spite of all this, before stacking up on credit cards, you should always keep in mind certain important things to get your credit cards.

10 Tips to be Followed:

Beware of credit card debt
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Before you plunge on to get a credit card and stack it up, you should always keep certain tips in your mind so that you do not face difficulty:

  • Pay utmost attention to annual fees:  The annual fees for Credit cards may range from $0 to $450 and can be even more. The annual fees of all credit cards are not the same. They vary from card to card and also from company to company. Hence, if you are planning to have a credit card, then before sending the application, please go through the annual fees section thoroughly. Though the annual fees are not expensive yet, you should have a look at it at least once.
  • Sign-up bonuses: The credit card companies do use a sign-up bonus so that people get credit cards. And there is nothing wrong with that. But if you are signing up, you should always look at what you are getting for yourself. But if you are getting a credit card just because you are getting a bonus, then make it sure that you can meet the expectations or, rather, in simple words, you can meet the requirements as per their protocol.
  • Avoid Minimum payment: Many people have the mindset while signing up for the credit card that they can just get away by paying only the minimum payment. If you are paying only the minimum payment, then there is a high possibility that you may get caught in a cycle of debt.
  • High-interest rates: Unlike a debit card, one has to pay an average higher interest rate of 16% to a credit card. When you are purchasing something using a credit card, the company charges interest for the privilege. In that case, you should keep in mind that you have to clear out the whole balance in a month, and if you are uncomfortable with that, then make sure you have a low-interest rate.
  • Perks: Some companies offer perks in addition to reward. These perks are often listed, and some perks are not made explicit. Hence research this before opting for a credit card.
  • Credit card debt: Before stacking up on credit cards, it is something that will let you in very easily, but it wouldn’t let you escape so easily. Hence, if you are thinking of using the card, pay off the balances that will help you escape or rather keep you away from debt.
  • Dangers for young users: Many studies show that credit cards act as an attraction to young people. Some young people think that these are free and hence you can buy a lot of things, but yes this misconception can even lead you to a very dangerous debt cycle which will ruin your life.
  • Secured and unsecured credit cards: One can get an additional benefit of raising credit score by using a secured credit card. But you should understand what the difference between secure and unsecured debit cards is. A secure debit card requires a deposit before you start using it. It’s just the difference with unsecured credit cards.
  • Women tend to have better credit scores than men. Men seem to overestimate their credit scores.
  • When you plan to buy a credit card, you will see many companies giving many offers but be very careful before choosing one.
Make sure you can pay your credit card balance
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Hence, this was all that you need to keep in mind before stacking up on credit cards. This article has been written to let you understand the important things that you should concentrate on while you proceed with your decision.

Featured Image by Yannick McCabe-Costa from Pixabay