Many people think that it is necessary to have a credit card, whether it is to build credit or just to have an emergency fund if unforeseen circumstances arise. However, too many people get into trouble with credit cards and soon find themselves drowning in debt. Often, this is because they have believed one of the many common myths that are circulating about credit cards and how to use them. Anyone who is considering getting a credit card must understand what these myths are and, more importantly, what the truth behind them really is. This is one of the best ways to protect yourself against the pitfalls that are sometimes associated with credit cards.
You Need a Credit Card to Create Credit
Many people think that in order to build a credit history for themselves, they have to have a credit card. While it is true that the credit reporting bureaus such as TransUnion and Equifax do take a person’s credit history into account when assigning a credit score, using a credit card is not the only way to do that. You can also pay bills on time, such as your rent, car payments, and utility bills. Also, just as you can use your bills to build your credit, such payments can also destroy your credit if you are regularly late in paying your bills, or you miss paying them altogether.
Credit Cards Are Necessary to Shop Online or Rent a Car
Although it may have once been that you needed a credit card to rent a car or shop online, that is no longer the case. Today, you can do just about everything with your debit card, or your bank card, that you can with a credit card. So, you can use your bank card to shop at most places online, and you can certainly use it to rent a car, even if the rental company needs a small deposit first. The only thing you cannot do with the bank card that you can do with a credit card is to spend money that you do not have – and that is actually a good thing.
A Credit Card Is Necessary for Emergencies
It is true that everyone should have an emergency fund just in case something happens and they need access to substantial funds right away. It is also true that many people use a credit card for this purpose. This does not mean, however, that it is the best course of action. To create an emergency fund, all you have to do is set up a bank account, preferably a savings account that will earn you slightly more in interest. An emergency fund should have at least $1,000 in it but, ideally, an emergency fund that will cover three to six months of your expenses is best. When you use a bank account, you are in no danger of spending money you do not have and going into debt. Just make sure that you do not spend the funds in the bank account if it is not for an actual emergency.
A Credit Card Will Help You Save Money
Many people think that store credit cards are better than others because they are cheaper and they come with many discounts, such as a 10 percent discount. However, stores do not offer these discounts simply because they want to. They understand that most people will not pay off these cards every month, no matter how many good intentions they have to do so. When borrowers fail to pay off the card, the store will charge them interest and they will make much more in interest than the borrower is saving just for paying with the card. Additionally, just because a credit card was issued by a store does not necessarily mean that it will be cheaper. These cards usually charge just as much in interest as other cards, if not more.
A Credit Card Helps You Earn Rewards
It is true that many credit cards come with rewards such as Air Miles. It is also true that many people sign up for these cards simply to take advantage of the awards they offer. However, the rewards you earn will not be worth it if you max out your credit card and find yourself struggling with debt. In addition to considering whether or not you can handle the debt, you also have to consider the annual fee you will be charged just for having the card. If the benefits of the rewards do not outweigh the cost of the annual fee and the chance of running into debt, you should not take out a credit card.
One Missed Payment Will Not Hurt Your Credit Score
Many people think that they can miss one, or even two, credit card payments and they will not suffer many consequences. However, you can lose up to 100 points on your credit score for a single missed payment, particularly if your score is very high. If you have a low credit score, a missed payment will still affect it, but not as much. Low credit scores will likely only fall between 60 to 80 points due to a missed payment. The lesson, though, is that you should not miss a payment any time if you can help it. The truth is that it will hurt your credit score, no matter what.
Our Florida Debt Defense Lawyers Can Help You
Sometimes you can try everything possible and still find yourself suffering from credit card debt. It may even get so bad that credit card companies and debt collectors file a lawsuit against you. When that happens, you need a solid defense and our Fort Lauderdale debt defense attorneys at Loan Lawyers can provide it. We know that a lawsuit may be the worst-case situation you could imagine, and we can help you out of a bad situation. If you need a solid defense, call us today at (954) 523-HELP (4357) or contact us online to schedule a free consultation with one of our attorneys and to learn more about how we can help.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation and find out more about our money-back guarantee on credit card debt buyer lawsuits, and how we may be able to help you.