Credit cards can be easy to get for some people and more difficult for others. If you have bad credit there will be many credit cards you’ll never get your hands on, and you might find yourself paying annual fees just to have a card. But, having a credit card can also help boost your credit score (if you’re using it wisely).
There are equal parts good things and equal parts bad when it comes to credit cards. The bad things, though, are usually caused by negligence, by you using your cards improperly. Here’s a quick lesson in the good and the bad of plastic money.
Different Fees And Rates
Different cards have different fees and rates, and those rates can also depend on your credit score. People with bad credit will likely have a higher interest rate than someone with good credit. Before you sign the dotted line for a credit card contract you want to look into what the APR is, how much interest rates are, and even figure out if it’s a fee-free credit card.
Cards that have a yearly fee are generally reserved for those people suffering from bad credit. However, if all you can get is a card with an annual fee it could be worth it. Having a few hundred dollars extra to your name when it comes to available credit can look good on your credit report and even when you find yourself in need of a loan.
How They Affect Your Credit
Credit cards can have both good and bad effects on your credit score. If you apply for too many credit cards or get declined for any of them, it can negatively impact your score. On top of that, the fact that you even applied will stay on your credit report for up to two years.
If all of your credit cards are maxed it’s going to have a negative effect on your credit score, and it defeats the purpose of having them. Too many credit cards can also look bad. While having a certain amount of available credit through loans and credit cards can look good, too much is almost just as bad as too little.
Dangers Of Using Them Unwisely
If you’re using credit cards like cash you could be getting yourself into trouble. You need to think of them as small loans that you need to pay back. In fact, looking at it like a payday loan is the best way, since you’d be working toward paying your entire balance every month.
The more often your cards are paid off the better your credit. Plus, when you have a balance on your credit card that money is continually adding to the amount you owe, depending on the balance and how much you pay in interest.