What's bad about credit cards?

Question

What are monthly and annual fee? Do I have to pay those amounts every month and year despite paying my credit card transactions on time?

My sister wants me to apply to old navy credit card so she can get 10% off. She says I can cancel the credit card afterward, but wouldn't that be bad for me?

Answer 1

that would be very bad for you credit just to get a card for the 10% off. Some cards you have to pay an annual fee but you can find cards were you don't have to. The bad part about credit cards is DEBT.

Answer 2

There are a lot of questions in there to get answered so let's go through in order-

What's bad about credit cards? Nothing, if you use them properly (which most people do not)

There are no monthly fees (you might be thinking of a monthly interest rate) and an annual fee is something that gets charged every year to you by the company for the priviledge of using their money.

If you pay off your entire credit card, in full, each month by the due date (payment must be applied by the due date so you can't just pay on the due date) then you would not pay any interest. Credit cards typically give you a grace period (usually up to 23 days) days without interest on your new purchases each month, as long as you pay off your card in full. As for an annual rate, if your card has one, you are required to pay it, even if you pay off your card in full and on time every month. Never sign up for a card with an annual fee because it's just a waste.

As for what you're sister is suggesting- it really depends. Each time you apply for a credit card or loan, the company bring up your credit score to see if they want to give you one. This is considered a "hit" on your credit. A "hit" every once and awhile will not hurt your credit. However, if you have too many hits on your credit, that will actually lower your score.

So the rule of thumb I go by is- if you've applied for two credit cards or loans or two had other kinds of "hit" on your credit in the last 6 months, do not apply for anything else at this time. But as for opening a card, paying it off, and closing it, other than the "hit" on your credit, this doesn't hurt it.

Answer 3

There are some credit cards that charge monthly fees. You don't want those -- really high interest rates, all sorts of other extra charges. And some cars have annual fees. Try to avoid those also. There are plenty of major credit cards who do not charge fees.

The bad thing about credit cards is people forget they are spending money. It's too easy to whip out that plastic and they end up in debt.

If you only charge what you can afford to pay in full every month and always pay on time, you won't have any problems with credit cards.

Answer 4

Credit cards allow us to pay for things the cashless way and do it by an easy credit. They bring a lot of simplicity to our lives but credit cards have their own drawbacks. Here are a few of them.

High interest rates

By far the biggest drawback of credit cards is the high cost of loan. The APR's for purchase, balance transfer, cash advance etc. are very high and skyrocket if you miss on few payments. These interest rates make the actual cost of any purchase higher because of the high interest rate component. So, the money with credit card is easy money but at a very high interest rate.

Easy to spend

Money is awfully easy to squander with credit cards. Just a swipe and its done. This ease and the fact that credit card companies encourage spending with lucrative discounts, cashback etc. can drive a credit card holder into buying frenzy, which can drastically increase the credit card debt.

Missing on repayments is costly

Credit card companies severely penalize late payments. Things like slapping of a full late payment fee even if a credit card holder misses the repayment by a day, revoking the rewards instantly, applying high APR rates instead of low introductory rates are not uncommon. Besides, costing financially the default on repayments can also blemish the credit report, which has very serious repercussions on the financial future of an individual. Read more from: http://www.credit-card-gallery.com/article/354,3_disadvantages_of_credit_cards_that_shouldn't_be_overlooked

Answer 5

If you pay them off each month and never charge more than you can afford , they aren't so bad . you'll be able to buy things on sale even when you are broke and pay for them after you get paid and the sale is over. however, if you don't pay them those fees and interest mount up fast. I had a store cc with a three hundred dollar limit. I reached the limit but then couldn't ever afford to pay it . I now owe over $1000 in late fees and interest. If you can't afford to pay the whole amount always pay more than the minimum because the minimum is usually just one dollar more than the finance charge and you will be paying forever!

Answer 6

unless you have perfect credit dont do it,
most banks charge you intrests on new purchases now,
and opening it will look bad on your report if you open alot of cards at once, and closing it will impact your aviable credit used credit ratio which is 35% of your fico score,
not to mention if your sister cant pay it usually over 205 intrest and you could get default on your credit report,
if your sister really needs a credit card, she should get a secured one on her own,
annual fees need to be paid even if you pay your balance in full, and the monthly fee is usually an annual fee paid monthly instead of annually

Answer 7

when you apply for a credit card, you are ageeing to paying the introductory rate which usually lasts for about a month, then it jumps to 22.99% which nobody needs to pay, the company knows that you will forget about the percentage hike that's when they get you! don't ever take out any cash advances,max-out the credit limit, use it only what you can afford then when the comes, pay it in full! good luck!

Answer 8

Stay the hell away from credit cards, they will charge you loanshark rates if you make one mistake. I defy you to understand the small print, as it is mumbojumbo.
If you need a credit card, buy one at the store, a prepaid one.

Answer 9

Just give you sister the $10-$15 bucks she wants to save. In the long run it will be safer because of all the reasons mentioned in everyone elses postings.

Answer 10

Apllying for any credit lowers your credit score substantially. Go to the finance page of this website:
www.freecardealersecrets.com