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Credit Card
Are you the kind of person who should own a credit card? This may seem like an insulting question, initially, but as individuals, there are things that we are good at and things that we are not so good at. To paraphrase Mark Twain, "We are all ignorant, just about different things". Quite often, however, we fail to recognize some qualities in certain aspects of our personalities. There are a few questions that you can ask yourself though, which will help determine your suitability as a card owner.
Is shopping a form of entertainment for you?
Do you buy things that you do not need?
Do the words "on sale", or "reduced price" excite you?
Do you think that the credit card limit is actually yours to spend?
If the answer is yes to all but especially the last, then maybe you are a danger to yourself and possibly your family if you are walking about with a live credit card. It is hard to believe that some people literally think that if they have available funds on their credit card, that they also have the right and financial ability to purchase whatever they please, but unfortunately this is a reality with the younger generation.
The truth is this... The ability to repay should be the main indicating factor in whether or not a purchase can be made. Some believe that it makes sense to buy things today that they can earn the money for tomorrow and some even have paid one card debt with another card, simply because they can.
This behaviour may not necessarily be down to a lack of will power or a negative character flaw, just a reaction to the times we live in. In this day and age of materialism and pseudo wealth, it takes a certain amount of restraint and an understanding of how the world works to say no to the trend of constantly purchasing, and if you think the temptation is too much for you then you are probably better off without a card.
While, owning and maintaining a credit card is a good way to establish a good credit report for when you need it, there are other ways to establish and build credit. Home equity loans, and personal lines of credit are a great example of one way to do this. This will obviously allow you to use the equity in your home to obtain credit. It is however important to use this credit wisely also, although accessibility to these funds is more restricted than a credit card and you also have a visible monitor of decreasing funds and rising mortgage interest payments to deter you.
Statistics show that the amount of credit card debt that is owed cannot, and will not ever be paid. The ideal attitude to adopt is that nothing should ever be purchased which cannot be paid for today.
The real trick is to buy what you can afford, by using a credit card, and then pay it off, in order to establish credit and keep your sanity and possibility your dignity. If you can not afford to do this, you should never own or use a credit card. People who purchase whatever they want, regardless of whether or not they can pay for it, should ask themselves, "Is a credit card for me"? The answer is absolutely not and if they find they are unable to control spending they might consider switching to a secured visa card.
