There are many reasons to open a credit, but not all of them are very good reasons. Opening a credit card because you don’t have sufficient funds to purchase the things you want is not a very smart idea. Millions of Americans find themselves in credit card debt every year. It may be nice to be able to borrow money, but don’t forget that it comes at a cost. Interest rates on credit cards generally range between 7 and 36% in the United States. While this may seem small, if you have an unpaid credit card bill of just $100 that interest charge can be anywhere from $7 to $36. That means you are paying a lot more for the items you purchased than you originally thought. And to be clear, the average credit card bill per month is much higher than $100.
So what might be a good reason to open a credit card? Well, one reason is to build credit. Everyone has a credit score that is used to show lending agencies what kind of credit history you have. If you have a lot of unpaid credit cards, or even multiple late payments, this poorly affects your credit score. If however you use a credit card, and other loans, wisely you build a good credit score. A good credit score will help you when you go to purchase or lease a car or buy a home. In order to have a credit score you need to have a credit history and this is where a credit card can be good. If you pay off your entire bill every month (essentially use it like a debit card) then you will start to build a history of having good credit skills.
If you ever find yourself in over your head with credit card bill you should at least pay the minimum balance. While you will still be charged interest, this does not affect your credit score as badly. Make sure that you save every penny and pay off the entire balance as soon as possible.
Here are some great resources for credit info:
your650score.com
lifelock.com
So what might be a good reason to open a credit card? Well, one reason is to build credit. Everyone has a credit score that is used to show lending agencies what kind of credit history you have. If you have a lot of unpaid credit cards, or even multiple late payments, this poorly affects your credit score. If however you use a credit card, and other loans, wisely you build a good credit score. A good credit score will help you when you go to purchase or lease a car or buy a home. In order to have a credit score you need to have a credit history and this is where a credit card can be good. If you pay off your entire bill every month (essentially use it like a debit card) then you will start to build a history of having good credit skills.
If you ever find yourself in over your head with credit card bill you should at least pay the minimum balance. While you will still be charged interest, this does not affect your credit score as badly. Make sure that you save every penny and pay off the entire balance as soon as possible.
Here are some great resources for credit info:
your650score.com
lifelock.com