Many consumers curse the day that they got their first credit card because they quickly found themselves in debt up to their eyeballs.
The fact is however that it’s not the credit card that gets a person in trouble, it’s their habits and misconceptions about using credit that’s the problem. Indeed, using credit cards the correct way can be an excellent way to build credit and, when the time comes, get much better rates on things like car loans, home mortgages and so forth.
Below are some excellent tips for using credit cards wisely. Read them, learn from them and, as always, enjoy.
Tip #1: Save all of your Receipts
Unfortunately there are many scammers out there who will add money to your bill after you’ve paid and left their establishment. Many times these changes are extremely small and, if you don’t save your receipts and compare them to your statements every month, there’s a good chance that you’ll miss them.
Tip #2: Remember that your credit card is not free money
Simply put, credit is debt. If you use your credit card you immediately have debt that needs to be paid off. If you have $15,000 in credit and you use all of it, you will be $15,000 in debt and facing big financial problems.
Tip #3: Don’t just use any credit card
Credit cards come with annual fees, interest rates and other fees that can really add up. Your best bet is to shop around for the best deal on a credit card before you decide to get it and start using it. The better your credit is to begin with, the more options you will have, and vice versa.
Tip #4: Pay your entire balance at the end of every month
Two things happen when you use a credit card; you gain debt and also affect your credit score. The more credit that you use at any given time, the lower your debt to credit ratio is, something that’s not good. To avoid going into deeper debt and damaging your credit score, pay off as much as you can every single month and, if possible, your entire credit card bill every month.
Tip #5: Avoid cash advances like the plague
One of the most expensive ways to borrow money is to take a cash advance on your credit card because the interest rates are incredibly high. A much better choice would be to get a credit line from your bank or a personal loan.
Tip #6: Scan and print out both sides of every credit card you own
Once you do, put those printed copies somewhere extremely safe so that, if your credit cards are ever stolen, you can use the information and phone numbers to call your credit card companies and make sure that your credit, and your financial life, aren’t ruined.
Tip #7: Stay away from store credit cards
The fact is, credit cards from most department stores are some of the most expensive out there. Yes, you might get an excellent promotion by applying for one when you’re at the store but, unless you pay that credit card bill off in full every month, you’re going to lose any money that you got in discounts because of the extra money that you’ll be paying in interest.