Using credit cards can be both a blessing and a curse. If you aren’t able to meet the minimum monthly payments you’ll only get further in debt. Though, credit cards can be easy to understand and a great way to establish credit if used properly. To further your understanding of credit cards, here is some basic information that you should keep in mind when using credit cards.
Do Not Close a Credit Card
A fundamental point that many people may not be aware of is that you should not close a credit card after you have paid it off. This will hurt your credit score. Instead, have an area where you keep all of your financial information and store the credit card away. These unused paid off credit cards are good for your credit standing and could be used in the event of an emergency. In fact, if your card is paid off, check with your credit card company to see if you can lower the interest rate on it. Since you carry a zero balance, they may be willing to do this.
Credit Cards Are Not Extra Money
Credit cards should be considered an extension of your bank account, not additional money that you can spend. You should be able to pay off any charges added to a credit card by the end of the month. This will help you avoid paying interest on these charges. When you have to start paying interest, you’re paying extra for the purchase you made. Take a look at your finances and figure out how much you can safely spend each month. Never go over this amount, so that you can be sure to meet the monthly payments, preferably paying the entire amount each month.
Pay On Time
Always pay your credit cards minimum monthly payments on time. Many credit card companies will charge late fees for late payments. If the minimum monthly payments are higher than you think you might be able to reasonably meet, you should contact your credit card company. They may be able to lower your monthly payments if you let them know your financial situation. These credit cards want their money back and are typically willing to work with you in order to get it, even if it means they’ll receive a lower monthly payment.
Some Research Goes a Long Way
Always research the credit card company you are considering using. Compare their interest rates and annual fees with other credit card companies. Try to get the lowest rates now so that you won’t end up paying more later on. Also look at the credit limit available, if you end up going over your available credit limit there can additional fees involved.
Following these tips for credit cards and you’ll be able to build your credit score which can help you in the long run. A high credit score could help you with other purchases, such as getting financing for a house.