Many people in the United States wait years and years to have what they called ” credit card ” but in reality what is a credit card ? is it something that will help you , or is it something that will make your life a living hell ? Well most people when they do get a credit card they start spending money , and unless they are people who have a good job where they know for sure that every 1/2 month or every week they’ll have a paycheck written on their name you shall not go crazy when you get your first or second or third credit cards.
As more credit cards you have more is the risk you have of being temped to spend more money than the one you have in your savings account or more than the one you earn. Also Do you why it is not good to have many credit cards ? You have 3 credit cards , and you try to apply for another one . In some cases the bank given that credit card you’re applying for might say ” Wait a minute you have 3 and still wanting more , ummm something is wrong ” or the bank can look up for payment history and see you have paid everything on time and not the minimum payment so that bank might still give you that another card you applied for, But in case that bank denied that application then you’ll get an inquire on you credit report. Basically this tells the banks how desperate you are for a credit card , Normally you can have anything between 1 and 3 inquires per year anything more than 3 could cause problems.
So let say you now have 3 credit cards each from different banks and you know that you’re not the most responsible person in the world , So you spend the following amount of money every night you go out to eat with your girlfriend , with you buddies , or just by yourself.
Restaurant / Foood – $ 25.00
Gas – $ 20.00
Clothing/Accesories $ 10.00
Miscellaneous – $ 20.00
Total $ 75.00
So that is already $75 bucks you’re spending every night perhaps , But of course since it’s just a plastic that you use to pay for all that you don’t really realized that you’re spending $2,100 monthly . When you have a bill of 100.00 dollars in your pocket you know that you can’t go buy a leather jacket like the one you have always wanted , or a pair of Fendi or that gorgeous coach purse that cost $300.00 . Well with a credit card you are more likely to go ahead and spend the money even though you know better that when the statement comes the first days of the month you won’t have how to pay or you’ll start paying the minimum payment which is like paying nothing.
You’ll be asking yourself ” Why hasn’t the balance go down in the past months , if i being paying ?” Well the answer for that is one word ” INTEREST ” Credit card companies and banks charge an interest percentage which could range from 5.00 % all the way to 30.00% . So let say you paid $ 35.00 every month for 12 months .
35.00 x 12 = $420.00 this would be the amount you paid , Right ? No because now you must subtract the annual percentage which let say that in your case is a low 21.5 %
$420.00 x 21.5 % = $ 90.3
$420 – $ 90.3 = $ 329.70 That is how much you really paid to your credit card , but now during the month of April and December you forgot to pay the credit card because you were on vacations and you just forgot well take away $60.00 from those 329.70 and you will be left with 269.70 . Why ? Remember those two months you forgot to pay ? well every time you forget to pay your credit card the company could charge you anything from $15.00 to $45.00 and since you didn’t make the payment on time twice now you pay $ 60.00 for late fees.
Many people don’t think of this when they are applying for a credit card but its the most important you shall see besides the percentage of interest. This is the Annual Fee , Which in some cases can vary from $50.00 all the way to $500.00 . And Why pay so much money for something you haven’t even spend ? well those are a few things you must see before applying for a credit card. What if I don’t pay the company the money i used ? Well the bank will start calling you every day at all times . If you don’t answer then they’ll block the card until you make a payment to try to bring down your balance and if in your case this never happens then the bank will give you anything from 10 – 60 days to contact them and make a payment , however you don’t have the money or you just don’t feel like making a payment then you can start forgetting about having any loans , or credit cards again , maybe after 10 years you will be able to start again this journey to poorness.