Most people these days don’t think of credit cards in a very good light because when they think of them they think of debt and payments and misery. The truth, however, is that you can have credit cards and not have crushing debt because of them. There are millions of people who have credit cards but never pay finance charges, late fees or anything else extra. They do it because they know a few tips about using credit cards to their own advantage. Read along and I’ll pass those tips to you.
First, using your credit card as a revolving credit line is the worst thing you can do. If you don’t want to pay extras and fees you need to only charge what you can afford to pay at the end of each month. This involves knowing your income and your budget quite well and keeping records, like a checkbook ledger, of the purchases you make as you make them. It’s not hard to do today what with computers and other electronic devices but it is vital. Frankly, if you don’t spend more than you make you’ll never have cc problems.
If you do use your credit card for a short-term loan you need to look closely at the terms and the timing. If you do it right it can be OK in many cases. For example, if you purchased a $1500.00 dining room and charged it to acredit card with an 18% interest rate but paid it off completely in 4 months the finance charges would only amount to $57.00. The same scenario played out over 2 years would cost an extra $300.00! Big difference, especially if you purchase like this often.
Keep in mind that spending money is very, very easy but paying it back, especially as the bills and the interest climb, is extremely hard. As both increase you will be spending more on past purchases and have less for present purchasing, which can put you in a real bind and cause a mountain of stress.
Having a huge amount of credit debt, even if you’re current on all your payments, will affect your credit score negatively. Experts say that if you don’t want to have this problem you need to keep your amount of CC debt lower than 35 percent of your available credit. The less you owe the better your score.
Keep in mind that there are alternatives to using credits cards when funding is needed. All too often consumers turn to credit cards because it’s the only means they can think of. Consider looking for online loans is if you need cash fast.
So there you go. Probably some of the best advice about credit cards that you’ll ever read. If you’re just starting out you would be wise to follow them and make them a part of your own credit history.