Credit Card Accounts
Prior to considering the various credit card accounts that are available to you, it is useful to remind yourself of the important
role of this aspect of finance.
Any movement of financial capital is in general dependent on
credit. This is in turn dependendent on the credit-worthiness
and reputation of the individual(s) or organisation that assumes
responsibility for such funds.
In the world of finance, credit or, credit card accounts is the
granting of a loan and the subsequent creation of a debt.
As credit goes, it is granted to people or organisations who are
perceived to have a degree of financial stability. Those who do
not fit this criteria will more than likely be declined lending
or find that in order to secure borrowing, they are charged
extortianate interest rates.
Having credit-worthiness, whether this relate to an individual's
personal account or to merchant accounts, is paramount in the financial world,
especially since purchase transactions are increasingly being
carried out by way of the 'buy now - pay later' culture;
not to mention the many innovative incentives that are being offered to
customers - and credit card account holders in particular.
One such incentive for instance refers to companies who frequently
offer credit to their customers as part of the terms of a purchase
agreement. So if you want to make an expensive purchase - such as
a suite of furniture, the company will arrange the credit for you
to acquire it.
Credit cards are said to be the most widely available financial
product there is. With more than 80% of American households having
at least one, it is further claimed that on average we may have
approximately eight credit card accounts at any one time.
At the end of the day, it is not how many credit cards you
have, but how you go about managing them in accordance with your
financial or credit needs. How do you do that?
You will first need to understand the 3 basic types of
credit that are available, including the
credit card account and their uses
Remember that you have a credit card or several credit cards
because you have been deemed to be credit/trust-worthy by the
credit card companies. Don't harm this reputation by spending
up to the entire credit limit just because you have it. It is
a sure way to land yourself in credit debt you might find it
far more difficult to extricate yourself from.
Realistically speaking, you may only need one or two
card accounts. One perhaps for your general spending - which
you should aim to
pay off each month, while the other could cover you for little
emergencies or, if you own a business, to help tide you over.
Don't be drawn either by any lender's measure of what is
considered an acceptable level for a credit card accoun
debt. While the
general ratio of debt that is set by lenders is approximately
25% of your net income, be guided by your own common sense as
to whether this level is too high for your personal
circumstances
It is easy to assume that just because you have a good income
you don't run the risk of incurring a credit card debt.
However bear in
mind that people who incur credit card debt do so because of
unforseen circumstances such as losing their jobs, redundancy,
divorce or the death of a spouse
So there you have it! Credit, or using credit cards isn't a bad
thing - in fact, it is an efficient, convenient and safe means of
managing your financial affairs on a day-to-day basis. Just be
sure you use any credit cards with thought.
The content on this site is purely for information purposes only
and is not intended to replace your seeking professional financial
advice.
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