Having good credit makes life a whole lot easier. With proper use, credit cards can provide you with a favorable credit score and can assist you in difficult situations. Things can quickly get out of hand when credit cards turn your financial life upside down. So it is very important that we get a handle on how to use credit cards to our advantage. Here are some things to be especially mindful of:
1. Know what good and bad credit can do.
People can use up their credit to the point where it becomes difficult to buy anything. Outstanding credit makes it possible to land a home or a car with a low rate of interest, but bad credit can turn everything into a real hassle. If you do get a loan, you may have to pay very high interest on it. Bad credit can ruin your life. So know what you are getting into, and weigh every credit decision that you make.
2. Find the right card.
Different credit cards will be suited to different individual needs. So make sure to investigate the different options out there and do not be hasty in applying for just any card. Look at the different interest rates, along with the annual fees. Find a card that matches what you are looking to use it for.
3. Read the fine print.
Be informed on all the fine print. Much of the information that you need to know will be contained there. Hidden fees, yearly fees, cash advance fees, and late payment fees are all in the fine print, along with additional information. Introductory rates may be very appealing but will often change. These are all things you want to know.
4. Have a plan.
When you charge items on your card, you need to know how and when you will be able to pay for the items. A lot of people never consider these things. People should only use credit only when they have a plan in place to pay back what they owe. Maybe your plan is to pay back what you owe at the end of the month so that you are not charged interest. Maybe your plan is to not even use a credit card except for emergencies. Credit is often used with a longer-term repayment plan. Just be sure to have some plan for repayment that you can honestly commit to and feel comfortable with. You do not want to get caught up having bills that were not planned for which continue to cause problems for you down the road.
5. Keep an eye on all accounts.
Monitor your accounts on a regular basis and not any new changes or charges that are being applied. Remember your due dates by establishing consistent payment reminders. Also keep in mind that when your balance starts approaching your credit limit, your credit score may be adversely affected.
4 Things to Avoid Doing with Credit Cards
Avoid making only the minimum payments.
Many people choose to only pay the minimum amount on their credit card bills. However, making minimum payment every month will only add to the total amount you end up paying. By paying off your credit card balances as soon as possible you can avoid the additional interest that ends up accruing over time.
Avoid having too many cards.
Having too many cards makes it difficult to track all of your accounts, and it becomes easier to abuse your credit. Certain cards, such as store-brand cards, tend to come with higher interest rates. So you should try to limit yourself down to about one or two national brand cards. The easier it is to manage your cards, the better off you will be.
Avoid late payments.
Late fees can be pretty hefty, and making late payments can also hike up your interest rates. If you start approaching your deadline, you may avoid the late fees by making online payments or by paying over the phone.
Avoid cash advances.
The interest rates on cash advances are usually very high and are to be avoided at all costs.
Credit cards are very useful, but carry a lot of potential for misuse. Take a proactive approach when it comes to how you handle your credit cards by staying far away from the dangers that they can pose to users. Use them to your advantage, and never to your disadvantage. Credit cards are never an invitation to live beyond your means. They should always be handled in a way that is consistent with the money that you actually have. By being aware of these useful tips and the common things you want to avoid, you will not have to suffer the financial peril that so many people today are currently undergoing.