When we were kids everyone bought with savings and credit cards (CC) were still a thing of the future. What a difference a generation makes. Today everyone has a CC and buying on credit has become the norm. The easy availability of CC’s and Lines of Credit have proliferated the ‘Buy Now Pay Later’ scheme of things.
Most people have the best of intentions to pay off credit card (CC) balances every month. Unfortunately when this doesn’t happen before you know it you are only making minimum payments. Your CC gets maxed out, you take your next credit card offer and the cycle into ‘easy bad debt’ spins out of control.
All of this is considered ‘bad debt’ because of the high interest rates attached to them. Most people (couples) obtain joint credit which actually is not a good thing. Establishing one’s own credit is better. Why? Because if anything happens to the relationship, credit ratings can go in the dumper really quickly. If one partner loses their job and they start borrowing on a CC to weather the storm, it can bring the other down. If you are self-employed, by all means keep your credit separate from your spouse if he or she is employed elsewhere. Many people think that getting a ‘supplementary’ CC for a spouse helps their credit rating. It does not. In short, there are many more advantages for avoiding ‘joint’ credit and if you cannot qualify on your own, then avoid obtaining a CC until you can qualify.
All decisions to obtain credit should be made as a couple, as should the use of credit. Making any significant purchases without the knowledge and consent of your partner can lead to trouble. Did you know that credit problems are a primary contributor to divorce and to bankruptcy? It is extremely important not only to manage credit responsibly but to also choose the best CC for your needs. Whether features such as a CC that offers free groceries (we think this one is a bad idea…sorry PC Financial), gas, travel, out of country car or medical insurance, are best for your needs, make sure you research and understand such things as interest rate and service charge policies, minimum payments, grace periods, credit card insurance, out of country fees etc. And read the fine print when you receive your new CC. If you don’t like what you read, put the CC in the freezer and forget about it.
Also know when your statement date is each month and make any significant purchases shortly ‘after’ the statement date…this way you can take advantage of ‘free’ no interest credit for up to 50 days. If you find yourself making only minimum payments, look out. Whatever you do, never let the balance exceed 75% of limit. This shows good use of credit, and your credit score will not suffer. If you are a homeowner, and you are having credit troubles or you are simply concerned about your ‘trend’ , call us today for a free financial health check and some friendly, unbiased advice.