Anyone who has ever had a credit card, knows that they can be a mix of good and bad elements. Though they provide financial flexibility when needed, they can also create difficult financial burdens, if used improperly. Consider the advice in this article before you make another single charge and you will gain a whole new perspective on the potential that these tools offer.
Never get rid of an account for a credit card prior to going over what it entails. Sometimes, closing an account can cause your credit score to decrease. Also, be sure that you keep a few cards open that are responsible for most of your history, credit wise.
Most people don’t handle credit cards the right way. While there are situations in which people cannot avoid going into debt, some simply abuse their cards and rack up payments they cannot afford. You should always pay your full balance each month. This will keep your credit score high.
Understand the APR you are being offered. It is extremely important before you sign on to getting that credit card that you must know the interest rate. If you don’t go over this you may have to pay a lot more monthly than you expected. If the rate is higher, you may find that you can’t pay the card off every month.
Do not use one credit card to pay off the amount owed on another until you check and see which one has the lowest rate. While this is never considered the best thing to do financially, you can occasionally do this to make sure you are not risking getting further into debt.
Credit cards are often essential for young people or couples. Even if you don’t feel comfortable holding a large amount of credit, it is important to actually have a credit account and have some activity running through it. Opening and using a credit account helps you to build your credit score.
It is best to stay away from charging holiday gifts and other holiday-related expenditures. If you can’t afford it, either save to buy what you want or just buy less-expensive gifts. Your best friends and relatives will understand that you are on a budget. You can always ask ahead of time for a limit on gift amounts or draw names. The bonus is that you won’t be spending the next year paying for this year’s Christmas!
It is good practice to check your credit card transactions with your online account to make sure they match up correctly. You do not want to be charged for something you didn’t buy. This is also a great way to check for identity theft or if your card is being used without your knowledge.
You may want to consider using layaway, instead of credit cards during the holiday season. Credit cards traditionally, will cause you to incur a higher expense than layaway fees. This way, you will only spend what you can actually afford during the holidays. Making interest payments over a year on your holiday shopping will end up costing you far more than you may realize.
If you do a lot of traveling, use one card for all of your travel expenses. If it is for work, this allows you to easily keep track of deductible expenses, and if it is for personal use, you can quickly add up points towards airline travel, hotel stays or even restaurant bills.
Don’t be tempted to pay off the balance on your card immediately after using it. Instead, pay your entire balance once you receive your monthly statement. This has a positive impact on your credit record and can improve your score.
If you go to make a purchase with your credit card and you are told that there will a surcharge for using that payment method, you can refuse to pay it and demand they accept your purchase. Many credit card companies do not allow merchants to impose fees, so you should check out the policies of your card company.
Try to reduce your interest rate. Call your credit card company, and request that this be done. Before you call, be sure you know how long you have had the credit card, your overall payment record, and your credit score. If all of these show positively on you as a good customer, then use them as leverage to get that rate lowered.
Document everything you put on your card each month. Be aware that making impulsive buys can add up quickly. If you aren’t paying attention to how much you already put on your credit card, at the end of the month you may not have enough money to pay off the bill.
If you use your credit cards to pay for gas, do not run too close to your spending limit if you have a purchase coming up. Many gas stations will put a $75 hold on your credit card for a few days, eating up your available space, meaning you can not charge other things.
It can be tempting to break out your credit card for every purchase, especially if you earn rewards; however, if the purchase is very small, opt for cash instead. Some vendors require a minimum purchase for credit cards and you may buy extra things to bring the charge up. Only use your credit card when making a purchase over $10.
Credit cards have the ability to provide great convenience, but also bring with them, a significant degree of risk for undisciplined users. The critical part of wise credit card use is a thorough understanding of how providers of these financial tools, operate. Review the ideas in this piece carefully, and you will be equipped to take the world of personal finance by storm.
