Credit card debt is some of the worst debt you can have. It’s dangerous debt for consumers and creditors alike. This is why interest rates on credit cards are so high. The banks who are issuing the cards know that they might lose a customer to bankruptcy, and they charge astronomical interest rates to make sure that they make money off of every possible customer.
Credit card debt can weigh down your monthly budget with unnecessary payments, and it can also cause your credit score to take a huge hit. This type of debt is known as revolving debt. This means that instead of taking out a certain amount of debt and paying it off in a certain amount of time, you can take out more and more debt, within certain limits, every month. This means that this type of debt is unpredictable, so it counts seriously against your credit score if you have a lot of it.
You can, though, use a credit card wisely and well with the right tools and self discipline. The key to all of this is that you know you’re using the card for the right reasons. You don’t need to live off of a credit card, but you can use it to build up your credit. The way you do this is to open a credit card and use only what you can pay off within a month. Then, you will have a low debt ratio, so you’ll have a good credit score.
One way to do this is to use the credit card only for particular types of purchases that you know you’ll be able to pay off within a month. For instance, you might choose to use your card only to pay for gas. Then when your bill comes in, you pay it off in full every month.
This can get you points in a couple of ways. First off, it means that you’ll have a low debt to credit ratio. You can’t have a ratio at all unless you have some credit available. If you have a credit card limit but carry no balance, you’ll have a good ratio that will cause your credit score to increase.
Also, if you pay your card on time every single month, you’ll be able to rack up credit score points for paying your card on time. It’s important that you’re never late, though, as even one late bill can really sink your score.