Credit cards have many powerful advantages. They allow you to make internet purchases, hotel reservations, and many other things. However, credit cards can lead to many years of financial turmoil if you don't know how to use them properly. Credit cards should be taken seriously, and in this article I will explain the steps you need to take to make sure you keep you credit healthy while using your credit cards.
Credit cards are basically like loans. Any money you borrow will have to be paid back. You want to make sure you never charge more money than you actually have. While this may sound like common sense, many young people make the mistake of not figuring this out before it is too late. It is also important to keep track of your purchases and know your balance at all times. Small purchases will add up. You also want to make sure you hold on to receipts and compare them with your credit card statement. Mistakes can happen, and you don't want to be penalized for something which isn't your fault.
If you see something on your bill which isn't correct, immediately contact the company and report it. Never allow anyone to use your credit card, even if it is your family or friends. If they spend money on your card, you are the one who will be held responsible for paying the bill. Many people also make the mistake of borrowing more money than they have. You shouldn't borrow $700 unless you have at least $1500 or more in cash. Always make sure you have more money than you borrow. Not doing this can lead to you getting in debt which is difficult to get out of. If you default on your payments, your credit could be ruined.
It is also important to always pay your bills on time. Being late can lead to you being given finance charges and interest which make it harder to pay back the money you owe. When you pay your bill, always pay more than just the minimum payments. Most people who only make minimum payments can take a long time to pay off their loans, because the credit card companies will charge interest on the principle. Many people also make the mistake of using one credit card to pay off another card. This doesn't work, and can put you into even more debt.
The way you use your credit card will have an important impact on your future. The average American family owes $10,000 in credit card debt, and it will take them many years to pay off. You want to avoid this by being responsible and paying with cash as much as possible.
And all that credit can really cost us: Credit card companies made $43 billion from such charges as late payment fees, over-limit fees, and balance transfer fees in 2004 alone. (That's according to CardRatings.com)
But if you use your cards wisely, your use of plastic can help you save money and even help you earn bonuses. Here are four tips for being smart about your use of credit cards.
1. Make sure you have the best card for you and your family. Find the credit card that will give you the best interest rates, as well as the rewards that you need. About 60 percent of credit cards on the market today have some kind of rewards feature, whether it's airline miles, cash back, money for your child's college fund, or points toward merchandise at your favorite stores. If your card isn't offering you a premium of some kind, it might be time to shop around. Just make sure to also keep an eye on your interest rates and the other fine print before you make a switch or add a card to your wallet. Do your research on this before you make decisions because you don't want to be applying for a lot of cards or switching balances around too much.
2. The best way to be a smart credit card user is to not carry a balance on your card. If you don't keep a balance, then you are able to take advantage of the convenience your plastic offers as well as the card's rewards and premiums without paying anything in interest charges. Studies show that, on average, about 39 percent of Americans do pay those cards off completely each month. That's smart credit card use.
3. If you do carry a balance at any point in time, make sure your interest rate is as low as it can go. All it takes is a simple phone call to your credit card company to see if they'll lower your rate. If you have recently received an offer from a competing card, mention it to them to see if they can match it.
4. Don't go nuts with cash advances. Unless you are faced with a genuine emergency, it's a good idea to avoid using the cash advances that your credit card may offer. It may seem like easy money, but the fine print will often reveal additional charges, fees, and stipulations. Plus, it's an easy way to run up your balance beyond what you can afford to pay in the near future. Make sure you are well versed in all the fine print that your credit card offers.
Both Michael Colucci & Jamie Jefferson are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Michael Colucci has sinced written about articles on various topics from Credit Cards, Mortgage and Pets. Michael Colucci is a technical writer for - A site that offers credit cards with an intro rate of 0% for 12-15. Michael Colucci's top article generates over 74000 views. to your Favourites.
Jamie Jefferson has sinced written about articles on various topics from Fitness, Family Travel and Online Dating. Jamie Jefferson writes for and Momscape.com, where you can find special offers on. Jamie Jefferson's top article generates over 165000 views. to your Favourites.