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If you haven't gone through the exercise of developing a budget, you need to do so. It's not all that complicated. Just add up all of your fixed monthly expenses, then your variable expenses such as food and clothing and subtract this total amount from your monthly income. If you want to have a credit card you need to have enough money left over after all your expenses to pay your credit card bill and not just the minimum monthly payment.
How do you plan on using a credit card?
Is it your intention to buy new appliances on an installment basis? Is your goal to accumulate points for an airline flight or for your shopping? Or maybe you want a credit card to help you establish a good credit history? What you need to do is compare the cards available and then sign up for the one that best fits your needs. That way you would be able to maximize your benefits.
Consider a debit card instead
If you're at all concerned about your ability to handle credit and debt you might consider getting a debit card instead. Debit cards give you all the same benefits as a credit card. However, they’re linked to your checking or savings account so that you can't spend any more money than you have in that account. And a debit card does offer several benefits:
- Debit cards have no interest charges. You’re using your own money and so long as you use the card sensibly it won't cost you anything.
- Carrying a debit card is easier and better than carrying cash. Cash can be lost or stolen and if so, there's no way to replace it. On the other hand, if you lose your debit card all you have to do is notify your financial institution. It will cancel the card and send you a new one. And if there are illegal charges made on the card, you should be able to get your money back -- though it may take as long as 60 days.
- When you use a debit card, you have the option of getting cash back. I use my debit card at the grocery store and almost always get $20 or $40 cash back. That's easier than going to my bank and, unlike ATM machines this costs nothing.
- Debit cards are more secure than credit cards. When you use a credit card all you’re required to do is sign a receipt. But when you use a debit card you must type in your four-digit pin number to validate the purchase. Many stores prefer this because it reduces their risk. Plus, it's much easier for a thief to use a credit card than a debit card because he or she has no way of knowing your pin number.
Keep all your receipts
Whether you get a credit or debit card, make sure you keep all of your receipts. This is an easy way to track your spending so that you will know where your money's going. You would be able to sit down at the end of a month, take out all of those receipts and see exactly where your money went. When you add this to your fixed expenses, you’ll know if you're spending exceeded your income or not. If so, you will need to make some adjustments in your spending.