Whether you’ve just gotten out of debt or have just received your first card, the following guide from Eric Medd of bad credit loans will help make sure you stay smart with your credit card.
Sure, it’s easy to point out how easy it is to get into serious trouble with credit cards. If not used properly, credit cards can put you into serious debt, drag down your credit rating and prevent you from ever getting approved for a loan or card again. However, it’s not the credit card that’s causing damage to your finances – it’s the hand that wields it!
Always Pay On Time. It’s common sense that paying your cards late will significantly lower your credit score – but did you know that making a late payment can also skyrocket your interest rates? Legally, credit card companies are allowed to hike interest rate payments up to 30% if you’ve missed a payment – don’t give them the opportunity to take even more of your hard-earned income!
Don’t Fall For Rewards Programs. If you’re bowled over by the awards that a potential credit card will provide you, then take a good long look at the fine print. Typically credit card companies charge larger interest rates in order to offset the costs of extra airline miles or cash back rewards. If the interest rate is higher than expected, trade in your rewards card for a card with a decent interest rate.
Stay Within Your Limit. You know that going over your credit card limit can really drag down your credit score – but did you know that exceeding 30% of your credit limit could also cause your credit rating to suffer? If possible, don’t carry a balance – and if you do, make sure you pay more than the minimum payment each month. Minimum payments are designed to keep you in debt longer, so put as much money as you can towards your credit card bills.
Don’t Go Card-Crazy. Financial experts recommend carrying only two to six credit cards; any more than this will reduce your credit score. Additionally, try to resist the siren call of department store cards – they may offer you significant discounts, but these cards can cause your rating to go sour very quickly.
Beware Of Introductory Offers. If you’re looking to transfer your balance to another credit card with a lower interest rate, make sure you read the finer details, since many banks will try to lure you in with an introductory rate that will skyrocket after a six-month period. Additionally, the low interest rate might only apply to transfers and not new purchases, so make sure you gain a little clarification before signing your name on the dotted line.
Skip On The Extras. Extras like credit card insurance may seem like a good buy, but you’re better off skipping these benefits; credit card insurance will only cover minimum payments if you’re unemployed or disabled, but interest will continue to accumulate regardless of your financial situation.
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