(10 points) Research some of the guidelines for obtaining and using a credit car
ID: 2669340 • Letter: #
Question
(10 points) Research some of the guidelines for obtaining and using a credit card for personal purchases. Do you think that Ling is using his credit card wisely?Requirements
- Write your essay in this document – do not save it in a separate file.
- You must clearly state your position with well-structured paragraphs using proper grammar, spelling, and sentence structure.
- This is not an “opinion” question – you must offer evidence to support your position, using properly-cited sources
- Your answer must be between 150-250 words (about 1 page of text)
- You must cite at least one source (book, website, periodical) using APA format.
- Do not use unreliable sources such as Wikipedia, and Yahoo! Answers.
Answer:
Explanation / Answer
do’s and don’ts of credit card usage encourage healthy spending habits for new and experienced credit card users alike. Don't * Use your credit card to make everyday purchases. Items like food, clothing, and gas shouldn't be purchased with a credit card. Using your credit card as a substitute for cash is a habit that can quickly lead to debt. For ordinary puchases, leave your credit card in your wallet and use cash or debit card instead. * Get into the habit of making minimum-only payments. Making only the minimum payment each month increases the amount of time it will take to pay off your debt. It also increases the amount of interest you end up paying. To pay your debts off quicker and cheaper, you should pay as much as you can on your balance each month. Five Reasons to Pay More Than the Minimum * Use your credit card to buy things you can’t afford. Living a borrowed lifestyle is the quickest way to get into debt. If you can’t afford a purchase today, chances are you won’t be able to afford it tomorrow, or even next month. * Close out a credit card without knowing how your credit will be impacted. There are times when closing a credit card can hurt your credit score. Avoid closing cards that still have a balance or those that make up a significant amount of your credit history. Do * Make wise decisions about purchasing items you need versus those you simply want. We’ve all used the word “need” to describe something we really just wanted badly. Using your credit card responsibly means recognizing which things you need and which you just want. * Let your creditor know in advance if you won’t be able to make your monthly payment on time. The worst thing you can do is simply forgo your credit card payment, no matter the reason. Most creditors will assist you if you let them know before you miss your payment. Simply call your creditor, briefly explain the situation, and ask that any late fees be waived. * Stay within 30% of your credit limit. A large part of your credit score considers the amount of debt you have. Keeping your balances low helps you maintain a good credit score. Not only that, lower balances are easier to manage than those that are higher. * Negotiate a lower interest rate. Especially if your current rate is higher than offers you receive. Your interest rate determines how much you pay for carrying a balance on your credit card. Evaluate the interest rate on your credit card periodically to be sure you are getting the best deal possible.
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