Credit cards are a ubiquitous part of most people’s financial picture. While they can certainly be extremely useful, they can also pose serious risk, if not used properly. Let the ideas in this article play a major role in your daily financial decisions, and you will be on your way to building a strong financial foundation.
In terms of a retail store’s credit options, you should never get a card with them unless you’re a loyal, regular customer. If a retail store inquires on your credit, the inquiry will affect your credit score, even if you do not open the card. Repeated applications for credit could negatively affect your overall credit score.
The reason companies have low minimum payments is so they can charge you interest on everything on top of that. Try to make a larger payment than just the minimum. Don’t incur expensive interest costs over time.
Keep an eye on mailings from your credit card company. While some might be junk mail offering to sell you additional services, or products, some mail is important. Credit card companies must send a mailing, if they are changing the terms on your credit card. Sometimes a change in terms can cost you money. Make sure to read mailings carefully, so you always understand the terms that are governing your credit card use.
Be sure to watch out for changing terms. It is common for companies to change credit terms very often. Many times, the terms that are buried deep in legal language, particularly the changes, that are most important. Be sure to read through everything to see the changes that may affect you, like rate adjustments and additional fees.
To make sure you select an appropriate credit card based on your needs, determine what you would like to use your credit card rewards for. Many credit cards offer different rewards programs such as those that give discounts on travel, groceries, gas or electronics so pick a card that suits you best!
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.
Don’t make a written record of your credit card’s PIN or password. Make sure you know your password so you ensure that only you have access to it. If you write down a PIN or password, especially if you put it in your wallet with your card, anyone can access it.
A great tip for saving on today’s high gas prices is to get a reward card from the grocery store where you do business. These days, many stores have gas stations, as well and offer discounted gas prices, if you sign up to use their customer reward cards. Sometimes, you can save up to twenty cents per gallon.
Your interest rates are not set in stone, and you can do something about getting them lowered. Because there is a large amount of competition in this industry, the interest rate is always negotiable. If your interest rate is higher than you would like it to be, make a call and ask the bank to reduce it.
Make sure your balance is manageable. If you charge more without paying off your balance, you risk getting into major debt. Interest makes your balance grow, which can make it difficult to get it caught up. Just paying your minimum due means you will be paying off the cards for many months or years, depending on your balance.
Some people think that avoiding credit cards altogether will help their credit because they won’t have any debt. You will never be able to build a credit report if you do not have at least one open credit card account. When you use it, pay for it! When people check your credit score, they are trying to evaluate your financial management skills. You cannot raise your credit score unless you use credit responsibly.
It is a good rule of thumb to have two major credit cards, long-standing, and with low balances reflected on your credit report. You do not want to have a wallet full of credit cards, no matter how good you may be keeping track of everything. While you may be handling yourself well, too many credit cards equals a lower credit score.
Just about everyone has used a credit card at some point in their life. The impact that this fact has had on an individual’s overall financial picture, likely depends on the manner in which they utilized this financial tool. By using the tips in this piece, it is possible to maximize the positive that credit cards represent and minimize their danger.
