What kinds of feelings come to mind when you hear the words “credit cards?” If you are like many other Americans, you probably feel anxious and nervous when you hear these two words put together. This fear and anxiety will pass, however, as soon as you arm yourself with proper information.
Do not accept the first credit card offer that you receive, regardless of how good it sounds. While you may be tempted to jump on an offer, you do not want to take any chances that you will end up signing up for a card and then, seeing a better deal shortly after from another company.
The best way to handle your credit card is to pay the balance in full each and every months. In general, it’s best to use credit cards as a pass-through, and pay them before the next billing cycle starts, instead of as a high-interest loan. Avoid finance charges by paying the balance in full and improve your credit rating at the same time.
Create a credit card spending limit for yourself other than the card’s credit limit. You need a budget for the money you make; therefore, your credit should be included in it. You don’t want to get into the habit of thinking of credit cards as extra money. Have a set amount you are happy to spend monthly using this card and stick to it. Don’t deviate from spending that amount, and aim to pay off the entire amount every month.
Before you decide on a new credit card, be careful to read the fine print. Credit card companies have been in business for many years now, and know of ways to make more money at your expense. Be sure to read the contract in full, before signing to be sure that you are not agreeing to something that will harm you in the future.
Take the time to play around with numbers. Before you go out and put a pair of fifty dollar shoes on your credit card, sit with a calculator and figure out the interest costs. It may make you second-think the idea of buying those shoes that you think you need.
Carefully consider those cards that offer you a zero percent interest rate. It may seem very alluring at first, but you may find later that you will have to pay sky high rates down the road. Learn how long that rate is going to last and what the go-to rate will be when it expires.
If you have a credit card, add it into your monthly budget. Budget a specific amount that you are financially able to put on the card each month, and then pay that amount off at the end of the month. Try not to let your credit card balance ever get above that amount. This is a great way to always pay your credit cards off in full, allowing you to build a great credit score.
Unless there is a lock located on your mailbox, do not have credit cards sent by mail. Credit card thieves have stated that they steal cards out of unlocked mailboxes.
Always know what your utilization ratio is on your credit cards. This is the amount of debt that is on the card versus your credit limit. For instance, if the limit on your card is $500 and you have a balance of $250, you are using 50% of your limit. It is recommended to keep your utilization ratio of around 30%, in order to keep your credit rating good.
Never apply for more credit cards than you actually need. It’s true that you need a few credit cards to help build your credit, but there is a point at which the amount of credit cards you have is actually detrimental to your credit score. Be mindful to find that happy medium.
If you have a spotty credit record, think about getting a secured card. These cards require a collateral, which is the balance. Really, you are paying interest for borrowing the money you have deposited. It isn’t ideal, but it’s the only method to improve your credit. Stick with good companies that have a reputation when you apply for a credit card. They will be in a position to offer you a regular, unsecured credit card in the future, and you can further improve your credit by using it responsibly.
Make sure you save your statements. Before you file them away, pay close attention to what is on them as well. If you see a charge that shouldn’t be on there, dispute the charge. All credit card companies have dispute procedures in place to assist you with fraudulent charges that may occur.
How do you feel about credit cards now? Do you feel more confident on how to use them? If so, then great, but if not, that simply means you need to continue educating yourself. By learning all that you can about credit cards, you will feel better about using them.