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Do I Need Credit - What are my Options?
Imagine impatiently standing in the checkout line to pay for a purchase, then having the awkward encounter of getting the Credit card declined and rejected. As the cashier hands back your credit card, there are dozens of reasons you start pondering on, as to why your card could have been declined - you have paid your balance on time and the last you knew the card was still active. So do I need credit? Is the first question on your mind and you soon found out that your credit limit has been slashed to just more than your credit card balance.
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The Drawbacks of Credit Cut-offs
Having the credit card’s limit cut is more than just an inconvenience and a unwanted hassle. If your limit has been reduced or decreased below your balance, you will have to face substantial over-the-limit fees, that credit card issuers and Banks charge whenever a purchase is charged more than the credit limit. Your credit score and banking history could also be hurt because now it looks like you've maxed out your credit card.
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The Awkward Moments
If you jump repeatedly between being in credit and using your overdraft, it's practical to keep as much amount in your account for as long as possible. Therefore, if you’ve the strength of will, set all your household bills and other standing orders to leave your bank account towards the end of your working month, affectedly boosting your balance.Doing this is theoretically, is the best solution for those with self-control, as it is not advisable to spend more on the card beyond its credit limit or to build up debt. A customer should stop using the card once the account is in credit.
Building a good credit history is very important if a person wants to get a job, buy a house, get a good insurance rate, and other things.
Protecting Credit
To protect the credit score, it's a good idea to keep the credit card balances below 30% of the allotted credit limit. On the other hand, if you have the money, it is suggested to make a lump sum payment that would bring your credit card balance down to that level. Not only will your credit score be safer this way, but that will also reduce the risk of over-the-limit fees.
Do I Need Credit to Earn Rewards?
This is a dangerous and a risky game to play. But if you are in authority and responsible and always pay your balance in full each month, you may consider having a rewards credit card. However, in such a situation, it is important to make sure that you have a credit card with no annual fee and to remember that the credit card proposes its rewards; because the company realizes that most customers are not going to pay off their credit cards in full and so this means that they make more money off the clienteles, then the rewards they give out.
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