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Benefits Of Responsible Behavior In Credit Card Usage

Jun 24, 2008
As soon as young adults hit the age of 18, credit companies tend to have a frenzy in trying to get them to apply for a certain credit card or service. Credit companies typically like to prey on the younger adults since they have less experience with credit, but even those with less experience can stay out of debt with responsible behavior and by adhering to several guidelines.

Credit card companies like to make the idea of free money as obvious as possible. After all, if a consumer goes on a shopping spree with "free money," they are more likely to find themselves in a debt to the credit company in question. Thus, the first lesson is to steer clear of thinking of credit cards as free money, and instead as an emergency money source in the event that consumers are in a tight situation.

Another important lesson in credit cards is that they can be used without repercussion, so long as the debts are paid off in a correct manner. Debts can usually be paid off within a month and no interest will be put onto the consumer. But should any items not paid for still be on the credit card after a month, interest rates will start to pile up faster than consumers will like. As long as a consumer knows they can pay off the debt within a month, credit card usage is usually regarded as safe.

To better reel in new customers and profits, credit card companies like to offer incentives for using the credit cards they offer. Incentives usually aren't very large- with some credit companies offering cash back bonuses or grand prizes for select users. In offering incentives, credit companies hope consumers get purchase happy and buy more than they can pay for, whereas credit companies would benefit from new interest rates to be paid.

Another more modern scheme among credit companies is to offer low interest rates for a certain period of time, and then increase them to unfair levels after a certain amount of time. Credit companies hope in this case that consumers forget they have to pay interest after a certain amount of time, or that they have bought a very expensive item during the no interest phase that carries over to the date where they need to start paying higher interest rates.

There is much to lose by using a credit card, but as long as a borrower can be responsible about the situation there is less of a chance debt will be obtained. In some cases credit companies will work with customers to adjust interest rates, plan payments, and even consolidate debts should they indeed be in over their head. In this case, credit companies can be just as helpful as they are greedy for money.

Closing Comments

Credit is an easy concept to understand, but a harder concept to teach to younger adults or those with a carefree purchasing personality. As long as a responsible behavior is observed in paying back credit companies, no debts should come to the consumer. And if at all possible, always remember that cash is the preferred method of paying for items, since it voids consumers of any possible interest rates down the road.
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