Credit Cards

So many people have their own credit cards today. From teenagers to retirees, almost everyone in the US has at least one credit card. Wherever we go we see advertisements for credit cards - on the television, in the newspapers, on billboards and we here about them on the radio - and in some cases credit cards, or applications for them, are mailed directly to our homes. Or we are able to apply directly online for a credit card.

But what are credit cards, why should you have one and what are some of the risks involved?

Basically, a credit card is a financial arrangement between you, the consumer or the card holder, and an institution such as a bank. The arrangement specifies that you borrow money from the lending institution with the promise that you will pay them back in the future. The institution agrees that it will provide the money you need and in return you are expected to return payment over a certain period of time. Your payment will include not just the amount of money you borrowed, but also an additional charge based on a pre-defined rate of interest. However, typically if you pay off the balance on your card by each payment date, you will not pay any interest.

Credit cards are useful for the following reasons: 

Convenient
If you see something you need, but you do not have the cash available, then you can buy the item using your credit card, and then pay for it when your credit card statement arrives. And of course, buying things on line demands a credit card, and makes shopping so much easier.

Emergency Protection
For emergency situations, credit cards are essential. Your car breaks down and you need to pay for the repair bill, or you need a prescription filling, and can only manage to drag yourself to the local drug store, not the bank as well, these are the times when it is necessary to have a credit card that you can use to set you back on track.

Records
Credit cards list your purchased items, so you are able to see at a glance, just where all your hard-earned money is going, and this will enable you to see if you are being frivolous or not!.

Security
Carrying cash around these days is becoming more and more of a problem, as there are so many attacks on individuals just for their money. By using credit cards, it reduces the need to carry large amounts of cash around with you. If your card is stolen, then you can report it and receive a new one in a few days, but your cash is still safe, especially if you report your card stolen immediately.

Traveling
If you are a traveller, then having a credit card makes your journeys so much easier. You can use your cards, and then just pay one bill once a month, without having to make numerous trips to the banks to withdraw cash.

Now credit cards are a blessing if used responsibly, but be warned, if you do not pay attention to your budget, then your finances can soon get out of hand.

If you find that you are in debt to the credit card company, then be assured that you are not the only one, and you can deal with it.
Here are some simple tips to help you cope with your credit card debt:

Make a Budget 
Make a list of all your monthly expenses, and see how much money you have available at the end of each month. Hopefully there is some. If not, you need to cut your expenses, maybe by eating out less, or moving to a less expensive apartment, or by using public transport instead of insuring your car and paying for parking every day.
 
Contact Your Creditors
Running away from your creditors is not the answer. It is not a solution, and may in fact lead you to bigger problems. If you are having trouble paying off your debts, address this immediately with your creditors. State to them sincerely and fully the reason why it has become hard for you to pay these debts, and check if they could give you a revised payment arrangement that will put you at ease on your payment terms. Do not let creditors turn over your situation to an agency to do the collecting for them, as this means that they have given up on you.

Address Debt Collectors
There is a law that gives certain conditions for debt collectors as to when and how they should ask you to pay. The federal law, Fair Debt Collection Practices Act, clearly states that those collecting debts may not bug you, give false assertions, or do practices that are not fair when they are getting to collect money from you.

Get Credit Counseling
You could also consider getting help from groups or institutions. If you have managed an improved payment arrangement of your debt with a good credit counseling organization, creditors may approve of your proposition and accept your modified arrangement plan.

Bankruptcy
Generally, personal bankruptcy is known as the last choice to fix your ballooning credit debt. A bankruptcy unfortunately stays on your financial information report for years. Getting additional credit, buying a house, sometimes even getting a job might be hard for you. Technically, however, it is a legal way of addressing your credit debt.

So basically, use your credit cards responsibly, and they will make your life easier during those stressful times when emergencies happen. BUT don't let it become a nightmare! Take control of your credit cards, do not let them control you!