Pay yourself first means to set aside money before you do anything else. If you save 1% of your income you might find how easy it is to save and you will start to save bigger amounts like 3% and then 5%http://www.getrichslowly.org/blog/2009/10/19/pay-yourself-first). Setting Money aside should be the first thing you do whether you put in a savings account or for your retirement( http://canadianfinanceblog.com/pay-yourself-first/).
It is recommended that once saving is a habit that you start making savings accounts like "new car" or whatever you what to save for (http://moneycoachescanada.ca/blog/paying-yourself-first/)
You should put the money you are saving in a account that is hard to reach eg Canada's Saving's Bonds(http://canadianfinanceblog.com/pay-yourself-first/)
Monday 20 June 2016
Responses
Pay Yourself First a phrase commonly used in Personal financing and retirement planning, it means to take a percentage of your paycheck and put it into your investments before spending any money. It's an effective way to make sure users continue to save every month.
Using this method teens and young Canadians today can start saving their money towards a financial goals they have in the future such as buying a house, car or vacations. How it would work for example is if I took 20% out of my 100$ pay, for cleaning, and put it into my savings account and investments I would, after 12 months, have 240$ worth of savings and depending on what I get for interest returns depends on how much money I make off of investing. If every Canadian were to apply this concept they would be making money off of their money while saving it and also not have to worry about losing their money by spending it as soon as they earn it. Another example of paying yourself first is a friend of mine he saves 50% of his pay check now which he can use later in the future if he wants to buy something like a car but, on the other hand his brother only saves 5% of his pay which doesn't make a huge difference in his savings account. Also when you compare how each brother saves you can see the first brother will have a mini lottery by the time he is older while his brother will have a smaller amount of cash left in his bank account so the first brother has more options of what he wants to do with his money and what he want to buy while his brother has less options and can fall into debt if he is not careful.
Using this method teens and young Canadians today can start saving their money towards a financial goals they have in the future such as buying a house, car or vacations. How it would work for example is if I took 20% out of my 100$ pay, for cleaning, and put it into my savings account and investments I would, after 12 months, have 240$ worth of savings and depending on what I get for interest returns depends on how much money I make off of investing. If every Canadian were to apply this concept they would be making money off of their money while saving it and also not have to worry about losing their money by spending it as soon as they earn it. Another example of paying yourself first is a friend of mine he saves 50% of his pay check now which he can use later in the future if he wants to buy something like a car but, on the other hand his brother only saves 5% of his pay which doesn't make a huge difference in his savings account. Also when you compare how each brother saves you can see the first brother will have a mini lottery by the time he is older while his brother will have a smaller amount of cash left in his bank account so the first brother has more options of what he wants to do with his money and what he want to buy while his brother has less options and can fall into debt if he is not careful.
Budgeting is an estimate of a person or company's revenue and expenses of a chosen period of time. The use of budgeting is a very small economic concept that has multiple variations for example a surplus budget means profits are predicted, or a balanced budget means that revenues are expected to equal expenses, and a deficit budget means that expenses will exceed revenues. Canadians can budget their money by taking their paycheck and putting certain percentages of it towards different accounts such as 10% goes to savings, 15% towards investments, 20% towards utility expenses, 30% towards rent, and then dividing the rest of their paycheck between other expenses and then putting the rest into a speeding account. the concept is similar to pay yourself first but in this case people or companies are organizing what is happening with their money in the future so they have a set financial plan.
If I was to use this concept with my paycheck of 100$ I would have 25% going into my savings account, 25% towards my investments, 5% towards donations, 5% towards my spending account and 40% towards my phone bill. This can be represented by a pie chart:
If Canadians, like myself were to apply this small concept on top of pay yourself first it would help benefit them financially and in the future.
Budgeting for Beginners
Why is budgeting good?
For a beginner a budget will not be easy as this will require changes, some big and some small, but changes nonetheless. Change is always a little terrifying , we cannot expect anything to get better if we do not make positive changes in our lives.
Steps to success :
1. Assess your income and fixed expenses
Gather up all of your bank statements, checkbook register (or other expense tracking system), bill statements, and any other financial information that you think may be relevant. Sit down and start crunching numbers.
2. Assess your variable expenses
Compare those totals to your Income minus Fixed Expenses. Being in the red means that you run out of money before the end of the month and may have to borrow money from savings, a friend, or pay on credit in order to survive. The key to success is to try, and to try again.
3. Add it all up
Now that you have created your budget, add up the numbers to make sure everything is in balance. If it is not balanced, go back and repeat steps one and two until you get the numbers to balance out.If there is an expense that is eating up so much of your budget that you cannot get the numbers to balance i.e (being spent on food or buying expensive brand name clothes), it may be time to get rid of that expense. If it is an expense that cannot be easily thrown out like car insurance, find other expenses that you can cut until you have your budget in balance.
4. Self Assessment
Put into practice those financial new year’s resolutions today and make a commitment to stick to them throughout the course of the new year.You will be in a better place financially once you do.
Conclusion :
In summary by budgeting, I will follow these steps like a john madden commentary and budget my expenses to make sure that I'm not spending a lot of money on unnecessary things like video games, junk food,etc. In the end all you want your budget to do is balance like a seesaw.
http://www.getsmarteraboutmoney.ca/en/maV2fs1PkrLIVnagingyourmoney/planning/budgeting/Pages/default.aspx#
http://www.investopedia.com/university/budgeting/basics2.asp
http://creativesavingsblog.com/beginners-guide-to-budgeting/
http://www.thefinancegirl.com/how-to-create-a-personal-budget-for-beginners/
Credit. The pros and cons
The definition of credit is, the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. Credit exists in many forms, the, cost common being a credit card. Each time you make a purchase with your credit card, you are using credit to pay for it. Some other forms of credit are loans and mortgages.
Credit, like almost everything, has its advantages and disadvantages. It’s important to understand these if you want to use your credit responsibly. Below is a chart of advantages and disadvantages of credit.
Advantages
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Disadvantages
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Credit is a helpful tool, as you could not possibly hope to buy a 320.,000 dollar house in cash straight up unless you have a very good salary, or if you get sick and nothing but your credit card to spend with. As long as it is used wisely credit is a usefull t you. Just make sure to pay it off and chose a card which is right for you
Budgets
Budgets
Budgets are a great tool for a young adult to make use of especially in their young life when they have many things to save for in their future (i.e. mortgage, car, etc.).
Budgets are a powerful tool in that they help you still have everything you need without spending way too much money on things. You can come up with a budget by yourself, with your parents, or with a financial adviser. For instance, a budget could be 40% of your paycheck goes into savings, while 30% goes to bills and whatnot, 10% goes toward food, 10% goes towards personal entertainment, and lastly 10% goes to tithing at church. If this person puts the majority of their money into savings but has enough for the other areas of his life, then he'll have lots saved up in his future, no matter what he makes.
As you can see, a young adult can use budgeting to avoid financial trouble and to maximise their savings in the end and make their bank account happy. Combine the bank cash with some of the other investment tools in my previous post, this young adult could really come ahead in life.
Paying Yourself First
Paying Yourself First
Many Canadian citizens should save up for retirement, but don’t. According to Global News, “there’s a disconnect happening in Canada. A large number of Canadians are looking forward to retirement – a time in their lives to be filled with travel, hobbies and quality time. But nearly half aren’t saving for it”. According to this website, 47 per cent of those polled aren’t contributing to a Retirement Savings Plan (RSP), one of the most popular tools for saving for retirement. RSPs are a powerful tool a Canadian can use to help save for their future retirement. If a young adult gets an RSP when they're young, they'll have lots of money saved up for when the time comes to retire.
One other tool one can use is compound interest. Compound Interest is a powerful tool one can use to their advantage. If you invest the smallest amount of money, compound interest will grow the cash exponentially. For example, if you invest $10,000 and earn 2.5% interest on the investment, you will earn $250 of interest, therefore making your balance $10,250. The next year, you will earn 2.5% on that $10,250. That will earn you $256.25, making your year-end balance $10,506.25. The third year, you will earn 2.5% on that $10,506.25, earning you $262.65 and making your balance $10,768.90. As you can see, you keep earning more and more on your investment. Some investments can command a powerful interest rate, sometimes even up to 25% and over, so investments like this is a good place for your money to go.
These two are just some of the ways a smart, young consumer can save up money for their future.
Avoiding Financial Fraud
Avoiding Financial Fraud
Tushar Khatri
What is a Financial Fraud ?
Financial fraud can be broadly defined as an intentional act of deception involving financial transactions for the purpose of personal gain.
For Example
If the investment broker is fully aware that no such repositories exist and still receives payments for worthless bonds, then victims may sue him for fraud.
Types of Fraud
- IIlegal Deposit Taking. Part of the money deposited by early investors is used to pay the profits due to investors. The operator continues paying these profits for a few months to lull investors into a false sense of security and to persuade investors to invest more.
- Cheque fraud. Dodgy cheques bounce because there are insufficient funds to honour them, or are simply fakes. In either case, the away to avoid this type of fraud is to insist on bank cheques or avoid cheques altogether.
- Banking/Identity fraud. This involves someone acquiring your banking details and then using them to steal from your accounts.
- Direct theft. Employees may ‘lift’ stock or pocket payments by failing to process the sale or deleting invoices.
- Invoices and payments fraud. These types of fraud rely on your business having less-than-perfect accounting practices that see automatic payments made for incoming invoices for something you haven’t ordered or received. Or payments are made to non-existent employees, or excess amounts paid to actual employees
- Embezzlement. Is the illegal use of funds by a person who controls those funds. For example, a bookkeeper may use company money for his own personal needs. Many times, embezzlement stories don’t make it into the paper because businesspeople are so embarrassed that they choose to keep the affair quiet instead.
How to Avoid Financial Fraud :
- Don’t believe your caller ID. Technology makes it easy for scammers to fake caller ID information, so the name and number you see aren’t always real. If someone calls asking for money or personal information, hang up. If you think the caller might be telling the truth, call back to a number you know is genuine.
- Don’t deposit a check and wire money back. By law, banks must make funds from deposited checks available within days, but uncovering a fake check can take weeks. If a check you deposit turns out to be a fake, you’re responsible for repaying the bank.
- Do online searches. Type a company or product name into your favorite search engine with words like “review,” “complaint” or “scam.” Or search for a phrase that describes your situation, like “IRS call.” You can even search for phone numbers to see if other people have reported them as scams.
- Watch Your Investments and Verify Them. If you have a stockbroker or an investment advisor, you should verify your investment holdings independently, and do not rely just on the statements you receive from your advisor.
- Protect your PC. Many forms of financial fraud come through stealing of personal information on PCs. Keep that computer protected with the latest anti-virus software.
- Be Careful When Wiring Money. Wiring money is sending people cash, so use caution. Many con artists insist upon bank wires for transactions. It is almost impossible to reverse money wires once they have been completed, and hard to trace. Be sure that you are dealing with a legitimate organization if you are wiring money.
How I can avoid Financial :
When I go into the bank and I get a Credit card, I have to make sure that no one knows my pin or otherwise they can steal my card and abuse it, if it has not been reported stolen. Also, if I do online banking, where I pay phone bill online, I should have a security system on my laptop like Norton or McAFee to help avoid people hacking into the laptop to steal valuable information. Now when you get a new phone it asks you if you want to set up with yellow pages, this is because if you don't have them in you contacts it will put a name on the number and tell you exactly who it is, if not it says "spam or scam" to make sure your safety.
Conclusion :
In Summation financial fraud, is heartbreaking and could eventually wreck you financially, and because of this you need to take precautions that protects your identity and our money you have save up for. And downloading security, and yellow pages to help you know if is a scam or a person.
For more Info:
http://www.cbsnews.com/news/preventing-id-fraud/
Links :
Sunday 19 June 2016
Budgets
Budgets
Tushar Khatri
What is Budgeting ?
Budgeting is the process of creating a plan to spend your money.This spending plan is called a budget. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do.https://www.youtube.com/watch?v=6Ib-bdko5cE
Why is Budgeting important ?
Since budgeting allows you to create a spending plan for your money, it ensures that you will always have enough money for the things you need and the things that are important to you. Following a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt.
5 Reasons to have a Budget
- To set and reach financial goals. Once you understand the overall picture of your finances specifically, identifying how money flows in and out of your life, you can better see how to reach your financial goals.
- To plan for retirement. Though technically an aspect of building wealth, retirement planning is so vital to your future that it warrants special attention.
- For peace of mind. If you don't have a budget, you might not know whether you can afford a new flat-screen TV, a new car, or any other major purchase.
- Enables you to save for expected and unexpected costs. Budgeting allows you to plan to set aside money for emergency costs.
- Gives you control over your money. A budget is a way of being intentional about the way you spend and save your money.
Conclusion
In summation by budgeting, I can save up for my tuition and books for when I go to post secondary. Also, I can budget my expenses to make sure that I'm not spending a lot of money on entertainment, dinners, and spending money on more important and necessary things.
Links
http://money.usnews.com/money/blogs/my-money/2012/01/18/5-reasons-you-need-a-budget
Friday 17 June 2016
Budgeting
Sometimes, it's easy to lose yourself in bad spending habits, like spending twenty dollars on lunch, or buying expensive movies you will watch once and never again. Its spending habits like these that can lead to something worse, Debt. Some debt is unavoidable, like a student loan which is an important invest and the debt is most often necessary, or a mortgage. However there is one source of debt that is avoidable but common and very costly, it being credit card debt. There is a solution however, and that is to have a good budgeting system to prevent unnecessary spending and prevent the accumulation of debt.
To make a budget, it's important that you first understand how much you make. For everyone it's different, because you must make a budget appropriate for your current situation in life. For example, if Mark is making 3000$ a month just out of school his budget will be different then Frank who makes 5500$ a month, and is preparing for retirement their budgets will be different from each other, because Frank will most likely be focused on saving for his retirement and will be able to spend more per month then Mark.
Things to include in the budget once you understand your own finances and how much you're making, are payments you must make. Mortgage and student loans are important and must be included in the budget. Also, basic living expenses which include groceries rent and utilities. Another important factor, which having a budget is good for, is for cutting down on wasteful spending, such as, eating out too much, buying too many clothes and other expensive habits that could lead to overspending and going into debt.
Above is an example of a healthy budget. Although the saving might be lacking somewhat (this budgeter would want to attempt to free more space for saving) this is what a basic budget looks like, and if you decided to follow it, it will prevent you from going into unnecessary debt.
If you do still however find yourself in a tricky situation, such as your car breaks down and it will cost a lot to repair it, or you become ill and you cannot pay the basic parts of the budget, the saving is an important part of the budget for these exact reasons. If you save a lot and have money saved up, you can work through these tough situations. Your savings should equal three months of income. If this is all factored in, you should have a healthy budget which will make you more financially healthy and keep you from going into unnecessary debt, while helping you pay off your necessary debt.
Sometimes, it's easy to lose yourself in bad spending habits, like spending twenty dollars on lunch, or buying expensive movies you will watch once and never again. Its spending habits like these that can lead to something worse, Debt. Some debt is unavoidable, like a student loan which is an important invest and the debt is most often necessary, or a mortgage. However there is one source of debt that is avoidable but common and very costly, it being credit card debt. There is a solution however, and that is to have a good budgeting system to prevent unnecessary spending and prevent the accumulation of debt.
To make a budget, it's important that you first understand how much you make. For everyone it's different, because you must make a budget appropriate for your current situation in life. For example, if Mark is making 3000$ a month just out of school his budget will be different then Frank who makes 5500$ a month, and is preparing for retirement their budgets will be different from each other, because Frank will most likely be focused on saving for his retirement and will be able to spend more per month then Mark.
Things to include in the budget once you understand your own finances and how much you're making, are payments you must make. Mortgage and student loans are important and must be included in the budget. Also, basic living expenses which include groceries rent and utilities. Another important factor, which having a budget is good for, is for cutting down on wasteful spending, such as, eating out too much, buying too many clothes and other expensive habits that could lead to overspending and going into debt.
Above is an example of a healthy budget. Although the saving might be lacking somewhat (this budgeter would want to attempt to free more space for saving) this is what a basic budget looks like, and if you decided to follow it, it will prevent you from going into unnecessary debt.
If you do still however find yourself in a tricky situation, such as your car breaks down and it will cost a lot to repair it, or you become ill and you cannot pay the basic parts of the budget, the saving is an important part of the budget for these exact reasons. If you save a lot and have money saved up, you can work through these tough situations. Your savings should equal three months of income. If this is all factored in, you should have a healthy budget which will make you more financially healthy and keep you from going into unnecessary debt, while helping you pay off your necessary debt.
Pay Yourself First
Pay Yourself First
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To pay yourself is to set aside a set amount of money from your pay check to have it build over time so you can have a large sum of money to fall back on for retirement or if something where to happen that would put you out of work. Starting out by taking around 5% of any given paycheck is a good start, but over time it would be wise that you raise the amount you put aside. The best way to do this is by starting a bank account that will automatically take the set amount of money out every paycheck and will gain interest on the amount of money in the account. By doing this not only will your account grow by what you are putting in it, the interest collected by the bank will help grow the account even more. Having money set aside that you don't touch can help a lot in the future, it can help pay off loans, down payment on a house or car, or in worst case you are unable to work you will have money to live of untill you can get back on your feet.
Credit Cards
Credit cards are like a knife, when used correctly they can be very useful to every day life, but if used incorrectly or without care the outcomes can be very bad. Credit cards when used right are a incredibly assets to anyone but there are very stick rules to need ti follow in order to avoid the pit of debt and payments credit cards can bring. Some good things credit cards can bring in the ability to buy a house, without and credit card you cannot get the Mortgage required to afford a house. They are also us full for the little things, say you don't get payed till the 15th but you need food to eat till then (Say its the 10th). A credit card can grant you the ability to buy your food for the next 5 days, but you must remember to pay off the credit card after every month. This is where the dark side of credit cards shows up. When you don't fully pay off you credit card every month or if you late on credit card payments, the bank will charge you interest. These interest rates the bank charge can range anywhere from 15% to 25%/30%! So that $100 night out that you know you couldn't afford but you put on your credit card could now cost you $115 to $130 just because you didn't pay the bill on time. Over all, credit cards when used for convince and that can always be payed off are amazing to have. But that the same time they can send a reckless spender into massive amounts of debt.
What Does Pay Yourself First Even Mean?
Pay yourself first is a phrase commonly used in personal finance and retirement planning literature that means to automatically route your specified savings contribution from each paycheck at the time it is received.
Because the savings contributions are automatically routed from each paycheck to your investment account, this process is said to be "paying yourself first"; in other words, paying yourself before you begin paying your monthly living expenses and making discretionary purchases.
Investment Vehicles and Types of Investments
Using Credit and Credit Cards
Facts
- Credit cards provide interest-free credit from the time of purchase to the end of the billing period
- 60% of Canadians pay their credit card balance in full each month 1, so for them the interest rate is zero
- For those who choose to carry a balance:
- Credit cards offer access to unsecured credit (no collateral required)
- There are many low interest rate cards on the market and over 30 of those cards have an interest rate of under 13%2
The Bottom Line
Credit cards offer valuable benefits for both consumers and retailers. And the majority of Canadians use their credit card as a method of payment rather than a means of borrowing.
For consumers
A credit convenient and flexible payment tool accepted in more than 200 countries and at millions of locations worldwide. Benefits include:
- Access to unsecured credit (no collateral required against amounts charged).
- Interest-free payment from time of purchase to the end of the billing period.
- Instant payment of purchases, allowing for instant receipt of goods and services.
- Coverage for purchases if the item is damaged , stolen or not delivered within 90 days.
- 24/7 access.
- Fraud protection with zero liability to the consumer in cases of fraud.
- Other rewards and benefits, such as air travel points, car insurance, damage and loss insurance and extended warranty programs.
For retailers
Retailers are not required to accept credit cards, but do so in increasing numbers because that is the method of payment many customers prefer. Retailers that do accept credit cards receive many benefits, including:
- Fast, guaranteed payment, which can reduce line-ups at checkout. If every credit card transaction took an extra 30 seconds, it would use up an additional 27 million hours of staff time each year.
- The ability of accepting credit without worrying about the creditworthiness of customers, insufficient funds or outstanding receivables.
- Reduced cash on hand and cash handling time and costs, including counting cash at the end of the day, armoured transport, higher likelihood of theft and pilfering and potential mistakes by cashiers.
- Increased sales; ability to offer customers a variety of payment options.
- Expanded markets; ability to sell to customers throughout Canada and around the world in the currency used by the retailer.
Understanding Credit
Many consumers use credit to help manage their personal finances. Credit can be a mortgage to buy a house, a loan to buy a car, a line of credit for larger purchases or a credit card to make everyday purchases more convenient. It's important to understand how different types of credit work, and how to use credit to build a strong personal credit history. This section provides information on how a credit card transaction works, credit card products, budgeting, and avoiding money mishaps. Understanding credit is the key to using it wisely and making it work for you.
Managing Credit Wisely
It is sometimes easy to pay for purchases on a credit card, but don’t forget that you have to pay for what you buy later. Here are some guidelines for keeping control of your financial affairs and making credit work for you.
- Make a budget for yourself and stick to it. Make sure that you know what is coming in and what is going out. That way you will avoid unpleasant surprises on your credit card bill.
- Avoid impulsive buying. If you had to pay in cash, would you be making this purchase?
- Comparison shop as a matter of habit. Never buy anything - and that includes any form of credit — without comparing costs and value.
- Always read and understand credit application forms before you sign them.
- Be careful when co-signing a loan or guaranteeing a loan on behalf of others. Remember that you could end up paying off the loan if the borrower cannot handle it. Ask the same questions of the borrower that the lender would. Know the risks involved so that you can make a sensible decision.
- Be knowledgeable about the cost of credit. Are you using the right type for your purpose? Are you using a more expensive form of credit than necessary? For example, if you’re getting loans from a payday lender, talk to your bank. Banks have a variety of short-term loans that are much cheaper than payday loans, including lines of credit, overdraft protection and even credit cards.
- Be sensible about the number of credit cards you use. How many do you really need? Are you using them simply because you have them?
- Keep track of all your credit purchases. Save the receipts for checking against the monthly statements and for keeping a running total of your obligations.
- Remember, whether you use cash, a cheque, a card or a loan to pay for your purchases, to check out the reputation of the merchant, the store's return policies, the quality of the goods and the product warranty. Using credit to pay for something does not absolve you of your consumer responsibilities.
- Read your credit card agreement to understand how interest is charged on your purchases, including the interest on cash advances. Typically, interest starts to arise on cash advances the day you take out the money.
Credit can be good or bad. It's all about how you use it. Before you decide on using credit, consider all of the factors and weigh them against personal needs and values.
Credit score
The Equifax Credit Score ranges from 300-900. Higher scores are viewed more favorably. Your Equifax credit score is calculated from the information in your Equifax Credit Report. Most lenders would consider your score very good. Based on this score, you should be able to qualify for some of the lowest interest rates available and a wide variety of competitive credit offers should be available to you.
Budgeting
A Budget is an estimation of the generated revenue and expenses over a specific period of time in the future. A budget can be made for a single person, family, group, business, government, country, multinational organization or anyone/anything that makes and spends money. A Budget is a small economic concept that shows the tradeoffs made when one item is traded for another. There are multiple types of budgets for different situations:
- A surplus Budget means profits are anticipated
- While a Balanced budget means that revenues are expected to equal expenses
- A deficit budget means that expenses will exceed revenues
Budgets are usually compiled and re-evaluated on a periodic basis. Adjustments are made to budgets based on the goals of the person, group, or organization. In some situations, budget makers are happy to work at a deficit, while at other times, working at a deficit is shown as financially irresponsible.
Using these concepts canadians and teens, like myself, can formulate strategies that will help us to achieve financial goals if we follow a plan made for our money. For example if I were to make $450 in two months i would have a plan that would divide up the money to cover expenses i might have such as phone bills, clothing expenses, data expenses, phone repairs, and other types of expense, then I might put 10% into my saving account 10% into my spending account 30% into my investments, and donate or spend to rest of my money. Simply estimating and planning ahead can help canadians to work towards financial goals such as buying a car, saving for a house, buying a new appliance or phone, the possibilities are endless if a person, group or organization follows their budget plan. In this image below it shows a budget plan for a local business’ budget and how they organized their revenue and expenses for a certain time period.
Bibliography
The blog from the classroom
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Thursday 16 June 2016
Credit Cards and If They Are Worth It
Aren Swann-Gurka
The Good:
- They can have very positive start up bonuses such as a quantity of money when you sign up or points with every purchase that can be redeemed later on.
- If you sign up for a credit card with a cash back promotion you can receive a percentage of the money you spend back.
- It's not your money so when you spend money you still have yours in your bank until you pay your credit card payments.
- Most credit cards come with a lot of different insurance such as travel insurance, rental car insurance, and a lot more.
- If used responsibly your credit card can give you very good credit which is passed on and seen by bureaus which will be helpful in life later on.
The Bad:
- Although they can help your credit score they can also really damage it if you don't know what you are doing.
- They charge very big interest rates that can get you caught up in a lot of debt very quick
- Some cards will charge you start up fees and on top of that annual fees or percentage rates that aren't very nice to your bank.
- They can very easily encourage impulse buying costing you more and more each day on things you might not use.
As you can see the bad is basically just the contrary of all the good things about credit cards, except there is a bit less and that's only you if you use your credit irresponsibly. As long as you buy the correct card, know what you are doing and do not go on a spending craze every weekend you will be safe. Before anything else I will explain what a credit card is. Yes its a plastic card, yes its a way of paying, isn't that a debit card? No, Do not get these mixed up a debit card is your money a credit card is not. Everything you pay with using a credit card will need to be paid back later but at the time it does not take anything out of your bank. They are very useful in that sense and can get you out of, and in, from tricky situations.
Now I am not saying credit cards are the best things in the world, what I am saying is as long as you are aware of the bad things about credit cards and you have a fair reason to use them, by all means, you should get one. The points and credit it can make you alone is a huge reason to get one and they can help you for a long time. Now if you seem to have made some mistakes along the way do not panic you can get out of it. Do not go ahead and buy another to get out of debt it will not work as well as you think.
Now I am not saying credit cards are the best things in the world, what I am saying is as long as you are aware of the bad things about credit cards and you have a fair reason to use them, by all means, you should get one. The points and credit it can make you alone is a huge reason to get one and they can help you for a long time. Now if you seem to have made some mistakes along the way do not panic you can get out of it. Do not go ahead and buy another to get out of debt it will not work as well as you think.
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