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Household Credit Cards - Managing Household Credit Cards

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Whether you want to make a major one time purchase or you would like to buy everyday household items, credit cards can mean the difference between having something now or having to save for it in advance. Household credit cards can be very beneficial to individuals, couples, and families everywhere or they can create a false sense of financial security, ultimately leading to an overwhelming mountain of debt. The key to preventing the latter is through proper management of household credit cards. It is important to be aware of all the facts before accepting any offers, and once offers are accepted, to be diligent about keeping up with any obligations to the credit card companies.

Household credit cards give you the ability to make a purchase now with the option to pay later, often at flexible terms. Credit card offers vary in terms and conditions and it is wise to know all available options before entering into any contracts. A common offer often includes either a fixed or variable annual percentage rate (APR) and can really affect monthly payments and create extra debt with each purchase. The APR is often calculated monthly as a percentage of the total amount charged on the credit card. That amount is then added to any purchases made with the card, and is incorporated into the total amount due. Many household credit cards offer an “introductory” APR which is much lower than the APR will be after that introductory period ends. Being aware of the APR at all times during your contract can mean the difference between paying slightly over the original price of your purchases or two or more times the amount within the course of payments.

Often household credit card companies ask for a minimum monthly payment, giving an option to wait to pay the entire balance. Each month only a small percentage of the total bill is due, allowing more flexibility with payments but also extending the length of time it will take to fully pay off a balance. By extending the length of time a balance is on the card, a credit card company can collect more payments as the APR continues to add additional fees each month the card is not paid in full. That in mind, in order to pay off balances in a reasonable amount of time it often takes payments at least slightly higher than the minimum due.

Household credit cards can help to quickly build a good credit profile to allow future financing needs to be met. To build a good credit report, consumers should pay balances as agreed with the credit card companies and never accept much more credit than what is needed. If a consumer fails to keep the agreement with the credit card companies, over the limit fees, late payment fees, and higher monthly service charges can be assessed in addition to the current balance due. Also, some agreements state that if a single payment is late, the APR will be negatively affected, often rising to double or triple what was originally agreed upon. To prevent excess fees from being assessed, it is best to be aware of what is expected each month and to be sure obligations are fulfilled.

Ultimately the proper management of household credit cards can lead to an enhanced credit profile and more purchase options than ever expected. If balances are kept in check and all card agreements are upheld, than household credit cards can be both beneficial and positive experiences for consumers.

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