There is no denying the fact that credit cards can indeed, be part of a smart financial strategy. The important thing to remember is that they must be used wisely and deliberately. By using the ideas in this piece, you will arm yourself with the information necessary to make the types of decisions that will pave the way to a secure financial future for you and your loved ones.
When it is time to make monthly payments on your credit cards, be sure that you pay more than the minimum amount that you are required to pay. If you only pay the small amount required, it will take you longer to pay your debts off and the interest will be steadily increasing.
Keep track of how much money you are spending when using a credit card. Small, incidental purchases can add up quickly, and it is important to know how much you have spend on them, so you can understand how much you owe. You can keep track with a check register, spreadsheet program, or even with an online option offered by many credit card companies.
Do not close any credit card accounts before you are aware of the impact it will have on you. Many times closing an account can lower your credit score and will show up negatively on your credit report. In addition, it’s good to keep the credit cards associated with your credit history active and in good standing.
Only open retail store cards if you shop there on a regular basis. When you apply for store charge card, an inquiry is noted on your credit bureau report whether you are approved or not. Racking up a list of inquiries from several different retail stores can cause your credit score to drop.
Try your best to stay within 30 percent of the credit limit that is set on your card. Part of your credit score is made up of assessing the amount of debt that you have. By staying far under your limit, you will help your rating and make sure it does not start to dip.
Outweigh the benefits of having a credit card against the costs of using it before making purchases. You might see that their payment schedule, fees, and interest rate are higher than what you thought. To ensure you understand the credit card’s terms, take the time to read the fine print.
You should limit your search for new cards to those that don’t have annual fees and that offer low interest rates. There are many credit cards available with no annual fee, so choose one of these to save you money.
Make sure you are consistently using your card. You do not have to use it frequently, but you should at least be using it once a month. While the goal is to keep the balance low, it only helps your credit report if you keep the balance low, while using it consistently at the same time.
If you have poor credit, you might want to look into secured credit cards. These cards require you to add a balance to be used as collateral. Essentially, you’re borrowing your money and then paying interest on the privilege itself. Not a very good idea, unless you are trying to fix your credit score. Go with a reputable company when a secured card is applied for. They might offer you better cards later which can further enhance your credit score.
Look into the rewards that credit card companies offer. Find one that is going to pay you for making purchases on their card. If you are trying to maximize the rewards, charge everything you can on the card, but be sure to put enough cash back to pay the card off each month, in order to avoid losing your rewards to interest fees.
Stay away from high interest credit cards. Many people see no harm in getting a credit card with a high interest rate, as they are sure that they will always pay the balance off in full each month. Unfortunately, there are bound to be some months when paying the full bill is not possible.
It can be tempting to use credit cards to purchase things that you cannot, in reality, afford. That is not to say, however, that credit cards do not have legitimate uses in the broader scheme of a personal finance plan. Take the tips in this article seriously, and you stand a good chance of building an impressive financial foundation.