Understanding credit cards are not as hard as people make them out and if you don’t know much about them and you are struggling with them chances are you suck at it. Let me make this clear, many of us don’t have a clear understanding of out credit card and the reality is that credit cards don’t suck, you do!
When I was young and received my first credit card, I didn’t understand how they work. All I knew about credit cards is that I had to pay the money I use back and with low payments each month which sounded pretty sweet to me.
No one told me how exactly credit cards worked and what will happen when you give a 20-year-old college student with a broken mindset one. After overusing my credit cards I got my behind in so much debt, I blamed the credit cards company and not myself.
Credit cards didn’t suck, I did! I overspend. I lived above my means. And it caught up to me!
I want to make this post as simple as possible to help you have an understanding of credit cards and why you suck at it if you have credit card debt (if you went crazy as I did with them).
Understanding credit cards
Credit cards have interest rates
When you use your credit card to make purchases, these purchases are subject to standard interest rates called Annual Percentage Rate, also known as APR.
- Vary from card to card
- Person to person
- Varies by individual credit score
APR is a numeric representation of your interest rate. Credit card companies offer a grace period when you buy something. When you pay the balance in full each month by the due date, you owe $0 interest because you paid the amount you owe.
There are many types of APR
This type of APR applies to credit card purchases.
Cash Advanced APR
When you take cash out from your credit card or borrowed, the APR is higher. They might also be no grace period, and you will be forced to pay interest on the cash you withdrew from your credit card account.
Penalty APR is the highest APR of all! You are late; you are going to pay! If your account violates certain credit card terms and condition you will be charged with a penalty APR. You failed to make the payment on time.
Promotional APR tends to be a lower APR rate for limited time and it is always at a lower rate. This lower rate might vary, and it can be for specific transactions, when you open a credit card for the first time, cash advance or such.
Things you must know about APR.
- Credit card companies can’t charge APR for the first 12 months. The only time they can is if the promotional or variable rate or if the terms and conditions have been violated.
- ALWAYS review your terms and condition of your credit card.
- Credit companies should give you 45 days advance notice of any changes to your APR.
APR does not include fees
Credit Card Companies have their other sets of fees that they may charge you. Fees like balance transfer fee. So please be aware and double check your credit card terms and conditions about other fees that might be related to your account.
Reason why you suck at it
The reality is that credit card companies are in the business to make money. You didn’t have an understanding about credit cards, and your overspending mentality got you into credit card problems. The truth is harsh, very harsh. I learned the hard way after many years of denial.
You are constantly paying late fees.
The reason you are constantly paying late fees is because you are late. They have late fees for a reason, and that reason is to ensure everyone pays them each month. You pay one time late; credit companies will take the late charge away. You make this a habit it won’t happen again. If the due date doesn’t work for you simply make a phone call and they will change it for you.
You pay the minimum payment.
If you pay the minimum payment every month without paying more and, you can’t seem to get the balance down it is your fault. Analyze your finances and your spending habit and start paying more so you can kill the balance. The credit company is not to blame because you chose to pay the minimum balance every month.
You didn’t read your credit card rates.
You didn’t take the time to understand your credit card and read the terms and condition they were offering you. Now you feel like they trick you, and no one said anything to you about it. You were responsible enough to apply for this credit card; you should have taken the time to read what you were getting yourself into. You should of ask questions and do the research.
It’s not fair their interest rates are high.
If you have a bad record paying your credit card chances are your credit score is taking a beating! Credit cards are not free money; they are instant loans you have to pay back with interest. Treat the credit card company right by paying on time and paying more and see if they can lower your interest.
They made it so easy for me to spend money.
I blamed Credit Cards Companies because they made it so available for me to have instant money to spend. Well, the reality was that I had no self-control. I used my credit cards to buy stuff I thought would make me happy, to fit in! Blaming them hid the real reason why I was in so much credit card debt. It took the blame away from me. WRONG!
Want to be treated better by the credit card company? Take responsibility and start doing the right thing and pay the bill on time, pay the amount higher than the minimum required, and cut your spending habits.
Being a grown up sucks, I get it! But having a great credit score and being responsible financially is not bad at all. It has many great rewards.