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There’s a Price to Pay for Using Credit Cards

I received my first credit card many years ago, when I was a college student. I did not apply for it nor did I have a credit check to see if I was eligible.

It just came to my college post office box. As I reflect now, how did they get my name, much less my mailing address?

It was a gasoline credit card. That was strange because I did not own an automobile and had no plans to acquire one. I was a sophomore student at Johnson C. Smith University in Charlotte, North Carolina.

So, I was a big man on campus, at least in my mind, because I had a gasoline credit card and no car. What I found out later was several of my college buddies also had received the same gasoline credit card.

I ended up using it a few times to put gas in some of my friends’ cars. I guess I was just showing off.

One of the interesting things that I learned about my gas credit card was it had an interest rate. Further, I learned that if you paid the balance after the due date there was a late fee added to the original balance. I realized early on that paying off your balance on or before the due date was a good thing.

When I graduated from college and went to graduate school, I started to receive more credit cards and credit card offers. I thought to myself that these companies are following me. Again, I soon found out they were “following” a lot of my friends, too.

Another thing I learned about credit cards is that just because they send them doesn’t mean you have to accept them. I was proud of myself because I returned them to the companies.

Over time, I have understood more and more about credit card companies and how they operate. Once upon a time, I didn’t know anything about a credit score. What exactly was a credit score\beacon score?

Your credit score is made in part by the way you pay your bills. If you pay your bills on time and pay more than the amount due, it will affect your credit score in a positive way. If you are late paying or simply pay the minimum amount due your credit score will be affected in an adverse way.

Credit card companies check an applicant’s credit score and will affix an interest rate to the credit card they send you. Some of us will receive a 0 percent interest rate while some of us will receive a much higher interest rate.

Credit card debt and high interest rates can affect your ability to buy a house or make any other major purchase.

Some years ago, credit card vendors would come onto college campuses with all kinds of gimmicks. For example, they would offer students a T-shirt or a cap if they signed up. What many students didn’t realize was they were going to receive a credit card with an extremely high interest rate. Thankfully, this practice has stopped.

We are in an age now where credit card spending is on the rise. One of the first things a salesperson will ask you is whether you using your (insert name) card today. Of course, if you do, you will receive an additional 10 percent off your purchase.

Another strategy that stores and credit card companies use in luring new customers is to offer incentives. For example, if you and I apply, we’ll get an additional 5,000 points to use toward our first purchase.

These ploys are used to get as many of us in the credit card game as possible.

Don’t be dazzled by the inducements and the free stuff. Many of us have been around long enough to know that there is nothing free in life. There is always a price to pay.

Remember the advertising slogan, “Pay me now or pay me later?” We as consumers must be in control of our spending habits.

Whenever possible, let’s try to use cash and/or a debit card. That will always ensure that we won’t receive a bill at the end of the month.

If we must use a credit card let’s be aware of the interest rate. We must know the difference between a fixed rate of interest and a variable rate of interest.

I don’t want a credit card company to get too comfortable with my patronage, so every few months I will call to check about lower interest rates. I will also call to let them know about other companies offering me better interest rates. I will tell you that these strategies have worked to my benefit.

I believe young consumers are the most vulnerable when it comes to credit cards. I also think that online shopping has resulted in increased credit card use. While the online price may be less expensive, you will probably use a credit card. Just remember that the credit card bill is coming at the end of the month.

While we may not think about it, our children are watching our spending habits. Let’s be good fiscal managers and model good credit card use for them. As we know, they will grow up and model our behaviors.

I am going to be a better credit card user. The incentives won’t sway me to use my credit card.

Won’t you join me?

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