The Give and Take of Loans and Credit

Self-control is defined as the ability to restrain one’s feelings or actions, and that is a very important characteristic when it comes to credit and loans. Using loans responsibly is one of the hallmarks of mature thinking. In this regard, it has nothing to do with age.

Easy loan access is beneficial when you need immediate cash to relieve an emergency situation or to enhance your life, but be careful that you are not using it as a piggy bank to tap whenever you feel like it. While a cash advance or personal loan can come in handy for financial emergencies, the downside is that you are adding another bill that has to be repaid over a long period of time. Ask yourself if the immediate need or desire outweighs the term of the loan. Consider seriously how your circumstances may change over a period of time; you may not be able to repay the loan, and you could risk foreclosure. If there is another way to meet your current need, could you more feasibly choose it?

A credit card can be your best friend or your worst enemy. Used responsibly, it can help you build a credit score that is the envy of friends and family. Major purchases, like a house or a car, are much easier to negotiate when you have a first-rate credit score. Building good credit takes time. Used unwisely, it can be the bane of your existence. If you know yourself well enough to admit that you are not a good candidate for a credit card, use a debit card or pay cash until you are ready.

The world of finance recognizes good and bad credit. Good credit may be an affordable mortgage that you take out to purchase a home that will grow in value, creating an asset. On the other hand, charging a thousand dollars for shoes and clothes that will wear out or go out of style is bad credit because it is not growing in value. Be wise enough to create good credit.

The quick access to cash and the convenience of having a credit card increase your purchasing power. This means that in the event of a crisis where you find yourself short of cash, you will have a safety net. It is a good idea to keep a reserve card to use for a calamity that you do not use otherwise. Given the number of credit cards available, it should be easy enough to find one that does not have a membership fee attached. Also, check out the various cards that offer 0% interest for a period of time. These can be especially desirable if you can pay it off within the allotted time.

An easy cash advance is another drawback to owning a credit card. Getting in debt is probably the furthest thing from your mind when you withdraw the cash, but think about it. Why do you need an advance? If it is something for which you can use the credit card, then use it, and pay it off at the end of the month. You not only have the benefit of the purchase you made, but you also have the reward associated with the account if that is a feature of the card. If that cash is simply to put in your pocket or to use frivolously, it is a sign that you are immature and not ready to have a credit card.