Credit cards are a handy way to purchase things without having to pay for them right away. If you want to take advantage of this utility without making financial mistakes, piling up debt, and hurting your credit score, you need to educate yourself on wise credit card usage. Read on for some great tips on how to be smart about using your credit cards.
Pay for your credit card on time every month so that you can maintain a high credit score. A payment that you make too late, will lower your credit score, while costing you a lot of money. If you set up an auto-pay schedule with your bank or card lender, you will save yourself money and time.
Many times, the reasoning behind the minimum payments that credit card companies set is due to the fact that they want you to pay more over time than you would if you paid more toward your debt. Every dollar over your minimum payment goes to pay off your balance, so always pay a higher amount than the credit card company asks you to pay. Paying off your balance faster helps you avoid expensive finance charges over the life of your debt.
Create a credit card spending limit for yourself other than the card’s credit limit. Include your credit when planning your monthly budget. Try not to think of credit cards as a source of extra money. Know how much you have allotted each month and keep a close eye on your spending to ensure you stick to it. Restrict your credit spending to that amount and pay it in full each month.
Keep a close eye on your balance. You should also remain aware of your credit limit. If you exceed your limit, then the fees are going to add up making your balance a lot harder to pay off. It will take forever to pay down your balance if you continue to go over your card’s limit.
Outweigh the benefits of having a credit card against the costs of using it before making purchases. You may find that the interest rate, payment schedule and fees, are more than what you initially thought they would be. Read its entire policy, including the fine print.
Don’t automatically run out and get a bit of plastic as soon as you are of age. It takes a couple of months of learning before you can fully understand the responsibilities involved in owning credit cards. Read further to gain some insight into the credit world.
Avoid ordering your bank cards via mail if your mailbox doesn’t lock. Many credit card thieves say they got their cards from unsecured mailboxes.
To avoid losing more money, confront your credit company about the opportunity for a lower interest rate. If you have a good credit history with them, they may give you a better rate. Simply call up your creditor and ask for a better rate.
Never give out a credit card number over the phone if someone else initiates the request. That is a common trick of scammers. You should never reveal your credit card number to businesses you do not trust, and even with your own card company you should only supply your number if you initiated the call. Never give your numbers to people who may call you on the phone. No matter who the person says they are, don’t know truly know their identity.
A lot of experts think that you shouldn’t have a maximum limit on a credit card that’s more than 75% of what you make a month. If your balance is more than you earn in a month, try to pay it off as quickly as you can. The interest on several accounts can quickly get out of control.
You may want to appear debt-free and so avoid applying for bank cards, but this is a mistake. You should always have at least one card so you can establish credit. Use it and pay it off each month. If you have no credit at all, lenders are not able to ascertain if you are good at debt management or not.
Don’t lie about your income in an attempt to qualify for a higher line of credit than you can manage. Sometimes, a credit card company won’t verify your income, and give you a limit that is more than you can afford. This is a very quick way to get into a large amount of debt.
Negotiate interest rates with your credit card company. You can usually negotiate your rates with your creditor. This tactic works especially well for consumers who always make on-time payments, keep their balances low and do other things to prove that they are reliable customers.
Credit cards may be useful, if they’re used properly. The tips offered above can help you use your credit cards in a more responsible way, so that you will have the benefits of credit and not find yourself sinking into debt.