Tips for Using Your Credit Wisely
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Once you have decided which card is right for you, there are some tips you can follow to use your credit wisely.
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- Follow your agreement. Pay your credit cards according to the terms of your agreements.
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- Pay online. Consider paying your credit cards online or over the telephone to avoid being late with your payments and incurring late fees. Being late will damage your credit record as well as your credit score. Also, depending on the terms of your credit card agreements, being late with just one account payment could trigger a steep increase in your interest rates.
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- Keep balances low. Don't run up the balances on your credit cards. If possible, when you make a credit card purchase, do not charge anything more on the card until you have paid off your account balance. If you do maintain a balance on your credit card, always pay more than the minimum amount due so you can pay off the card faster.
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- Cancel unnecessary cards. Cancel any retail charge cards you may have and pay off their balances.
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- Read all important information. Look through the inserts that come with your monthly credit card billing statements. Most of the inserts will probably be marketing solicitations, but some of them may notify you of changes in the terms of your credit-charges. These changes will almost certainly be good for the card issuer but not for you. Other inserts may notify you of your right to opt out of having the credit card company share your personal and financial information with other companies, and tell you how to opt out.
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- Don't skip payments. Take advantage of skip payment offers. You will be charged interest on your outstanding card balance for the month you skip making a payment.
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- Don't go over your credit limit. Exceeding that limit or getting close to it will damage your credit history and lower your credit score.
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- Minimize your use of cash advances. This is usually an expensive source funds, because the interest rate applied to a cash advance will be considerably higher than the one that applies to your purchases.
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- Don't buy credit card insurance. This kind of insurance pays your credit card debt if you become disabled or deceased, but it tends to be highly priced and mainly serves to generate big profits for card issuers.
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