Today’s smart consumer knows how beneficial the use of credit cards can be, but is also aware of the pitfalls associated with excessive use. Even the most frugal of people use their credit cards sometimes, and we all have lessons to learn from them! Keep reading for valuable advice on using credit cards wisely.
Keep track of how much money you are spending when using a credit card. Small, incidental purchases can add up quickly, and it is important to know how much you have spend on them, so you can understand how much you owe. You can keep track with a check register, spreadsheet program, or even with an online option offered by many credit card companies.
Know what interest rate your credit card gets. Before signing up for any card, knowing the interest rate is crucial. You may end up paying a lot more than you planned on if you are unaware of what you are being charged. You might not be able to pay off your debt if you have to pay more and more interest.
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.
To cut your interest payments, do not hesitate to phone your credit companies and ask for better interest rates. As long as you have a good credit history, you should be able to get yourself a much better rate. All you need is one phone call to help you get a better rate.
It goes without saying, perhaps, but always pay your credit cards on time. To be able to follow this simple rule, do not charge more than you afford to pay in cash. Credit card debt can quickly balloon out of control, especially, if the card carries a high interest rate. Otherwise, you will find that you cannot follow the simple rule of paying on time.
Avoid prepaid cards when you are looking for a secured card. These cards are debit cards, and as a result, they are not reported to the large credit bureaus. Oftentimes, there are extra fees charges for this. By putting a deposit down to obtain a secured card, your credit score will begin to improve.
If you cannot pay your entire credit card bill each month, you should definitely keep your available credit limit above 50% after each billing cycle. Having a good credit to debt ratio is an important part of your credit score. Make sure that your credit card is not constantly near its limit.
Stay away from high interest credit cards. Many people see no harm in getting a credit card with a high interest rate, as they are sure that they will always pay the balance off in full each month. Unfortunately, there are bound to be some months when paying the full bill is not possible.
Shop around for different credit cards. Interest rates and other terms tend to vary greatly. There are also various types of cards, such as cards that are secured which require a deposit to cover charges that are made. Make sure you know what kind of card you are signing up for, and what you’re being offered.
Have a note placed in a visible area in your home, indicating all the purchases done through your credit card. By having it in a visible area, you will always know how much you are charging to the card. Many times, people let themselves get into debt because they do not keep an eye on their purchases.
Use your credit cards regularly if you don’t wish to lose them. If you have an account that is not active, many companies will simply close the account. Try using credit cards for things that you have money for, then pay them off right away.
As noted earlier, you have to think on your feet to make really good use of the services that credit cards provide, without getting into debt or hooked by high interest rates. Hopefully, this article has taught you a lot about the best ways to use your credit cards and the best ways not to!