Using of credit cards during recession
With the recent state of the economy, many customers are unsure whether they should continue using their credit cards on a regular basis. During a recession, how should a consumer change the way that they use their credit cards? Use these tips to protect yourself, your credit card balance and your credit rating – despite the recession.
Although credit cards can be used for convenience throughout the duration of the recession, it is important to realise the true costs of carrying a balance through these times of financial uncertainty. With the recession come higher interest rates, especially if payments have been missed or are late. Credit card companies are increasing interest rate for many customers, especially those with unfavorable credit ratings or past history with the company.
Credit cards should not be used to pull yourself out of the financial depths. There are other methods which can be used to repay debt, such as part time employment and personal loans from friends and family members, which don’t come with the high interest rates of credit cards.
Don’t use credit cards to cover expenses. Find other means of decreasing expenses and frugal living while taking on part time employment or creating extra income. Credit cards have some of the highest interest rates and are therefore one of the worst ways to cover financial shortfalls.
Although credit cards may come with the convenience of being able to pay now, without footing the bill until later – the fees that come with this service are at higher rates than ever, through the recession.
Getting too close to your credit limits could mean trouble. For most banks, they are examining the credit that they are currently extending to their customers and rolling back the amounts of credit that are currently being extended. If you are one of these customers, and are close to your limit – this could mean you are over your limit! Not only is this bad for your credit rating, but it is also bad for the card as being over your limit means you are susceptible to extra fees and charges.
The credit card should only be used to finance purchases that will be repaid within the grace period. With most credit card companies, the grace period ranges from twenty to twenty eight days. The best time to make a purchase is right after receiving the credit card statement in the mail.
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