Jenny’s Blog

Credit Cards and the Economy

Tuesday, May 20th, 2008 | , | No Comments

*Note: This is a sponsored post

With the economy in flux and gas prices at an all time high (I think a barrel of oil hit $129 today), it’s important to be frugal with money, and intelligent about how you’re spending what you have. Getting into debt, or getting further into debt, can cause many problems in the long run. It can have a negative impact on your credit score, which can prevent you from getting loans for a home or a car, it can suck up your cash resources, and it can become an overwhelming burden that is hard to escape.

That said, having credit cards such as visa credit cards can help increase your credit score if used wisely. What I mean by this is using the card to make purchases you can afford, and paying it off at the end of the month, before needing to pay the finance charges.

Keeping your balances low or at a zero balance can help increase your credit score. If you’re wisely using a credit card, paying it off every month, the credit bureaus will look at that as a sign of fiscal responsibility, and will likely increase your credit score. If you have a very low credit score, and are in need of a bad credit credit card, there are some available that you can get, however, keep in mind that the interest rate will be higher (because people with bad credit scores are tended to be looked at as being “higher risk”).

If you currently have a lot of credit card debt, it’s ok. Work to pay off one card at a time (the one with the highest interest rate), and pay minimum balances on the rest. Once you’ve paid one off, start on the next one, and work towards paying them all off. Credit cards can be a double-edged sword. They can provide a lot of benefits such as providing greater spending power and helping increase credit scores - and some even offer airline miles and more. If they’re not used wisely, however, they can cause a lot of problems, and are an easy way to get into a lot of debt.

Moral of the story: If you’re looking to get a credit card, be wise about how you use it. Pay it off every month, don’t spend more money than you have, and carefully consider what cards you choose to carry.

Note: Credit cards can provide a needed means of capital for small businesses. I believe the same rules of thumb applies with business credit cards, however, they can be extremely useful if you’re looking to purchase products for your business. Again, be wise in how you use credit, but they can be extremely beneficial in helping get your business up and running.