The beauty of credit cards is that people can use them to buy things without having to pay for them right away. However, you need to know the basics of wise credit card usage so that you do not end up buried in debt. Here are some ways to use your credit cards wisely so that you avoid a lot of trouble down the road.
Think twice about accepting the terms of an interest-free, limited-time credit card when choosing to apply for credit. You might think you are receiving a great deal, while you ultimately end up spending more money than you planned.
Never switch to a different credit card just to take advantage of points offered for airline tickets or other rewards. Building a heavy debt on one card to earn points or rewards may get you free flights. But, the amount of interest and credit card fees you end up paying could have paid for those flights outright.
Never use a credit card to make a credit card payment. Panicked borrowers sometimes take out cash advances and purchase money orders in order to pay their bill. However, the interest rates and fees involved with this supposed trick is really just creating an even bigger emergency disaster the next month.
Be cautious of cards offering a zero percentage rate. Although no interest is tempting on the surface, some people will be encouraged to overspend. Usually after 6 months to a year these interest rates go up and that person now owes a lot more than they previously thought.
Many experts state the maximum limit for your credit card needs to be less than 75% of your income for each month. If your level of debt exceeds your monthly salary, then you need to focus your efforts on paying it down right away. The interest on that will soon be way over your head.
Don’t let anyone else use your credit cards. Although you might be tempted to help out a good friend, lending out your credit cards is not a good idea. You could be struck with expensive over-limit charges by your credit card provider if your friend accidentally overspends.
Each month, take the time to thoroughly go over your statement from your credit card company. Make sure to double check every charge you see on the statement. If you find inaccuracies or unfamiliar transactions, inform the credit card company right away. Disputes much more easily reach resolution when you begin them right away.
Only open retail store cards if you shop there on a regular basis. Even applying for a card with the store will reflect badly on your credit score if you’re not accepted, and there’s no sense in applying if you’re not a regular shopper. An excessive amount of inquiries from retail stores on your credit report can actually lower your credit score.
Always monitor your balance. It is also important to know your credit limits. Exceeding your limit can result in significant unexpected fees. If you continue to go over your limit, you will have a difficult time paying down the balance.
You can request a free annual credit report to ensure all the information on it is accurate. Compare the credit card debt shown on your report to your statements to make sure the information matches.
If you decide to stop using all of your credit cards, leave one account open for emergencies and to allow yourself opportunities to continue building your credit. It’s important to leave one open that has the best credit history. This will show lenders you’ve managed an account properly for a while.
Accurate recording of your monthly credit card spending is important. Remember that incidental and impulse purchases rack up quickly. If you do not monitor the amount of money you are spending with your credit card, you may not be able to pay the entire bill when month end arrives.
Before applying for a secured card, take time to read all of the small print and be sure that you fully understand the terms of the card. A lot of times, you will be told you need to deposit a tiny amount, but they do not tell you that the money you deposit will be used for fees, and you will have a lower limit on your credit.
It is a smart idea to have a couple of credit cards. You can improve your credit score by managing these cards responsibly, especially if you keep from carrying month-to-month balances on the cards. But, if you have more than three cards, lenders may not view that favorably.
If you are having any financial problems, make sure that you alert your credit card provider as soon as possible. You may be able to adjust your payment plan so that you won’t miss a credit card payment. Most companies will work with you if you contact them in advance. They may be less likely to report a payment that is late to the major credit score agencies.
Try not to use your credit card for restaurant and grocery bills, because they take a lengthy time to show on your credit statement and cause people to underestimate their account balances. It is possible that this will cause you to spend more because you think that the balance is less than what it actually is.
If you’re under 18, you will find it hard to obtain your own card. Yet, it is possible to be on a joint account with an adult that trusts you. Major card companies won’t cater to teenagers, but retail stores might.
Unless there is a lock located on your mailbox, do not have credit cards sent by mail. Credit card thieves see unlocked mailboxes as a treasure trove of credit information.
Negotiate interest rates with your credit card company. In many cases, you may be able to successfully negotiate a lower rate with your creditor. If you have made all your payments on time and have proven to be a good customer, chances are they will give you a lower APR if you ask.
When utilized correctly, credit cards have the potential to be beneficial. This article’s advice will assist you in properly using your credit card, while avoiding debt and keeping an ideal credit score.