For people in Wisconsin and around the country, understanding credit cards can help avoid financial downfalls. Due to their simplicity, credit cards make it almost too easy to create mountains of debt.
It's important to understand there's a vast difference between credit and debit cards. Debit cards draw on the money the consumer has in a bank account. Credit cards use the card issuer's funds, and the user has to pay them back. Anyone over the age of 18 can legally have a credit card. However, those who are young and have no income will need a qualified co-signer. Credit cards help establish good credit scores that are necessary to obtain home or car loans. In fact, landlords are also generally looking for tenants with a solid credit history.
It's wise to review spending habits before choosing a credit card. There are many cards out there that offer cash back, travel points and bonuses. However, once the card is in hand, understand what a grace period is. This is simply the time period the cardholder has to pay off the balance before the interest charges hit. How easy is it to get a credit card? Individuals who have a steady income and a well-maintained checking account shouldn't have a problem.
Credit cards, while a necessary tool in society, can cause consumer's problems if they don't understand their financial limits. Consulting with a bankruptcy attorney may be a good first step for those facing overwhelming bills. It may be possible for an attorney to negotiate a one-time lump sum payment to the creditors. If this isn't possible, an attorney may be able to advise the consumer on which part of the Bankruptcy Code is right for his or her situation.
Source: Huffington Post, "10 Things You Need to Know About Credit Cards", October 16, 2013