Dealing with financial stress is challenging for most people. Unfortunately it’s an issue that many of us face at least once in our life. There are many ways you can deal with financial struggles. If done correctly, you can use a credit card to manage tough times. Keep reading learn how credit cards can help.
Many might say that using a credit card may not be the best option while dealing with financial stress. With proper planning, you can use credit cards to manage debt and other financial obligations. Credit cards can help you in multiple ways to help you manage your money and mitigate any future debt. Many use credit cards so that they can work on building up their emergency fund. Some use credit cards for balance transfers to avoid accruing interest on existing payments. As long as you’re responsible, credit cards can provide you peace of mind and help manage through financial stress.
What Do You Need To Consider Before Applying?
Credit Score:
Although there are many other factors to consider, your credit score is crucial when considering applying for a credit card. If you find yourself in tough financial situation, your credit score can be can either be beneficial or an option that you might not even consider. In the ideal scenario, you would have good to excellent credit score. This will put you in an advantage to be approved for zero percent APR credit cards. So if you happen to be stuck digging yourself out of a hole, this can benefit you because it will give you ample time to repay debt interest free. A good credit score will range from 700 to 749 and an excellent will range from 750 to 850. On the flip side, applying for a credit may have to wait if you have bad credit. Take immediate action and create a plan to improve your credit score. Taking care of any late payments and making sure you make monthly payments on time is a great way to start. Applying for a credit card with lower interest rates and zero percent APR will be of greater benefit than applying for a credit card with higher interest rates.
Interest Rate:
As we discussed earlier, interest rate is an important factor when considering applying for a credit card. Often times, people are quick to turn to credit cards for a quick solution while disregarding the interest rate. Many credit cards offered today come with high interest rates. Once again, if you’re digging yourself out of debt, it’s best that you do research and find credit cards that offer lower interest rates. It’s difficult to find a credit card that offers low interest rates. Take your time to find a credit card that offers the best interest rate that will best suitable for you long term. Having a credit card with zero percent APR with a low interest rate will reduce your chances of accruing more debt in the future. Don’t make the mistake looking for a temporary solution just to find yourself in the same situation again.
Last Option:
Applying for a credit card can be a great option while going through an emergency but may not always be the best option. You should assess your current financial situation to see which solution best fits you. If you find yourself living paycheck to paycheck, using a credit card can make your situation worse. You risk the chance of failing to complete payments before the interest rate is applied. Think about other options to help you during emergencies before applying for a credit card. Seeking help from a family member can be your first option. They might be able to assist you with no interest required. Applying for a personal loan is another great option. There are many personal loans that offer lower interest rates than credit cards. It’s highly recommended that you prioritize other options that can reduce the risk of accruing more debt before applying for a credit card.
Emergencies happen and sometimes we aren’t prepared for it. Financial stress is difficult to manage but there’s always a solution to a problem. Don’t make poor decisions that will lead you digging yourself out of a deeper hole. Applying for a credit card can be great way repay your debt and can even help you save money for future emergencies. But in some cases, applying for a credit card should be your last option. Assess your financial situation and consider all options to manage your way through tough times.
Resources:
1. https://www.moneyunder30.com/using-credit-carefully-to-weather-tough-times
2. https://www.creditcards.com/credit-card-news/credit-card-terms-negotiate-change-1267.php
