Account balance and the more late fees you incur the

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account balance and the more late fees you incur, the more your credit card purchases will cost you. Owing more than you can afford to repay is likely to make you worry constantly and interfere with your sleep. It may also cause you to begin abusing alcohol or drugs and become depressed, and it may drive a wedge between you and your spouse or partner. Cer- tainly, stress caused by too much debt often affects job performance. Owing too much to your creditors will damage your credit history and lower your credit score. As a result, credit card companies may increase the rate of interest they are charging you and your life insurance premi- ums may go up. For more information on credit records and credit scores and how they can impact your life, turn to Chapter 5 in this book. You may have difficulty landing a good job if employ- ers review your credit record as a part of their applica- tion review process. • You may have trouble finding a landlord who will rent to you. When you have a lot of debt relative to your income, it will be difficult, if not impossible for you to save and invest for your future. Furthermore, if you have 136
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Using Credit Responsibly an expensive emergency, you may not have any money to pay for it in your savings account, which means that you will probably have to use credit and that will make your financial situation worse. You may have to file for bankruptcy. The goal of this chapter is to help you enjoy the many benefits of credit and avoid the problems. It provides you with basic information about credit cards and bank loans and explains when using credit is appropriate. It intro- duces to you to the various types of credit, explains how creditors will evaluate your application for credit, and pro- vides advice about how to use credit wisely so you can stay out of financial trouble. When Using Credit Is Okay It’s almost always best to pay for products and services using cash, a check, or a debit card. But let’s face it, some- times that’s impossible. So, here are some examples of when paying with credit makes sense: You want to purchase a home, a vehicle, or some other high dollar item that would take you a long time to save up for. • Your purchase will benefit you long after you have paid off the debt. For example, if you borrow money to weatherize your home, you will reap the benefits of lower utility bills for years to come as long as you con- tinue living in the home. 137
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Credit Hell You don’t have enough money to purchase a product or service that is essential to you, to one of your fam- ily members, or to your entire family. Examples of ne- cessities include utilities, groceries, gas for your car if you must use it to get to and from work, life-saving medications, groceries, and so on. However, if you reg- ularly lack enough money to pay such necessities, using credit again and again is not the solution and will make your situation worse. Instead, get your spending under control by reading the early chapters in this book and following the advice that is given.
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  • Spring '12
  • zinctolg
  • Credit card, Revolving credit

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