No one ever teaches young people these days about what credit card traps for single parents they should avoid. In fact, they could be spared a lot of heartache is someone just took the time to sit them down and explain these simple credit card tricks that banks and other loan companies use when they are trying to get new business. Credit card companies generally target people in their early twenties specifically because they are not aware of the circle of entrapment that is a credit card. And don’t think that you can get away with just having an ’emergency’ credit card. It almost always never works out to be that way and you end up in more debt than you can have ever imagined.
Single parents especially are prone to fall into credit card traps because they are stereotypically in situations where they have no upfront cash available and so they assume they can charge costs in the short-term and worry about it in the long-term. If any of these scenarios sound familiar to you, you may be one of the millions of people who have fallen for credit card traps. But don’t despair; there are some tips and tricks you can use to help you learn which credit card traps for single parents to avoid.
Avoiding pre-approved cards
Let’s not kid ourselves. No matter how good your job is or how much money you earn, in your early twenties there is no way you are going to get pre-approved for a credit card. However, the bank and financial institutions use the words ‘pre-approved’ because it makes you feel special. Those words are a trap because they make you feel that you are worthy of receiving a credit card. They give you a false sense of esteem that then causes you to sign on the dotted line and start using the card.
What they don’t tell you of course is that pre-approved or not, you eventually have to pay back the money that you spend, and that is when it starts getting messy. Don’t fall for words such as ‘pre-approved’, ‘specially selected’ or even ‘youth credit card’. The bank is not your friend. They are a business and ultimately they want to make money.
Buy now, pay later schemes
One of the biggest credit card traps for single parents to avoid lies in the buy now, pay later schemes that promise to stall your payments for a set number of months. Think about this. If you buy a thousand dollar computer and you want to pay it off over two years, whether you start paying now or in three months makes no difference because you will have to pay it off. All the three month stall period does is put you in an uncertain situation. In three months’ time when those payments have to start you may be in a worse financial situation, and that is when you open yourself up to repossession and bad debt. If you can’t afford to pay for something now, unless it is a big item such as house or a car, don’t buy it.
Credit card traps for single parents to avoid
Lack of Money
One of the biggest problems that single parents experience is a lack of cash when they need it, so they use their credit cards or store cards to charge what they need now in the hopes of paying it back later. But if we’ve learned anything from the millions of people every year who are bad debtors and have to have their wages garnished, it is that there is no such thing as charge now, recover later. This very seldom actually happens.
One of the best ways for single parents especially to avoid this credit card trap is to keep a record of expenditure. If you decide on a set amount to use on your credit card each month, and then keep a record of your purchases, you won’t be in debt that you cannot pay. As a single parent, you probably should be using a budget system anyway. Just keep in mind what will happen to your child if you go to debtor’s prison, or suddenly cannot afford necessities because you maxed out your credit card on luxuries.
Read the terms and conditions and ask for advice
Find out from a friend
Getting your first credit card does not have to be a lone situation. You can ask a knowledgeable friend, parent or mentor to come with you and explain what all the charges mean. Also, check the current interest rate on other credits cards before you sign on the dotted line. One of the biggest credit card traps for single parents to avoid is getting a card just because it is offered to you and not knowing the current interest rate. Imagine if you discovered that you were paying 15% on your card, while another bank’s interest rate was just 11%. Wouldn’t you be frustrated?
Be knowledgeable about the various credit card traps for single parents
The most important part of the credit card agreement, as with any type of legally binding agreement, is to read the fine print. Find out how many months you have to pay, what happens if you can’t pay, and all the other little bits and pieces involved in this type of contract with the bank. Be sure to check whether your interest rate is fixed or flexible. If it is flexible, the bank can change it as they see fit (within reason), which means you will ultimately be paying more. Be sure you understand before you sign and if you don’t, ask questions.
Do your research
If you are considering getting a credit card, do research beforehand to ensure you understand the process and what is required from you. Read the terms and conditions and ask questions. Keep a budget and remember to use cash rather than credit cards when you can. Check the interest rates and be sure you are getting the best one. And most importantly, now that you’ve learned what credit card traps for single parents to avoid, be sure to explain the various credit card traps for single parents to your friends so that they don’t find themselves in a bad debt situation.
Originally posted 2011-09-06 05:15:44.