Using Credit Cards Wisely

Having credit cards can be tricky. It is easy to fall into the endless cycle of debt and payments, and therefore, it is smart to learn how to use them wisely. Learning different tips and advice on what to do can help ensure you are using your credit cards sensibly, keeping up with your credit payments and not

Colorful stack of credit cards and shopping gift cards. Macro with extremely shallow dof.

hurting your credit score in the process.

When deciding upon what credit cards to pursue, you will want to take the time to research. Make sure to read all the application provisions carefully. You will want to know any fees, rates, interest, etc. that you may incur while using a particular card.

The key to successfully using credit cards is to never carry a balance. The trick is to not spend more than you can afford on a monthly basis, that way you’ll be able to pay the balance in full each month. If you can do this, you will avoid any interest or fees that could add up. You shouldn’t make non-essential purchases with your credit card while in debt. Use only cash or debit cards so you’re not over spending.

Another tip is to limit the amount of cards you have. However, if you do have multiple cards, try to keep “one clean card.” What does this mean? It means you use one card to make purchases and pay off each month, while steadily paying down the other cards. This way you are not consistently building interest on your cards and thus, never getting out of debt.

You also want to keep track of your spending. Always keep up-to-date with your online accounts, save your receipts and keep accurate records. By keeping track of your spending and records you will be aware of any errors or mistakes on your bills. This will also help you track unauthorized charges, disputes about merchandise or services and refunds of your credit balances. If you find any error within your accounts you want to take immediate action to avoid any additional cost on your part.

Know your statement closing date! By law, credit card companies must allow a 21 day grace period between the close of your statement and the date the bill is actually due. By knowing this date you can use it to your advantage and get the most out of your credit card. For example, if you make a purchase on the closing date, you have 21 days to make a payment before incurring any interest. If you complete a transaction the day after your closing cycle, you then have an additional month until the next cycle, plus another 21 days to pay off your balance.

Lastly, if you go to close any card accounts, it is very important that you send a written notice to the issuer, explaining the closing of your account. If you close a credit card account by phone, you could lower your credit score by 20 to 30 points. A letter shows you are the one who chose to close your account and not the issuer. Therefore, your credit score will not be negatively impacted.

Tips for using your credit card safely

  • Never lend your card to anyone.
  • Never sign a blank charge slip. Draw lines through blank spaces, so one cannot change the amount on the slip.
  • Do not put your account number on the outside of an envelope or postcard.
  • Always be cautious before disclosing your account number on the telephone or online unless you know the person you are dealing with represents a trustworthy company. (There are several scams that attempt to steal credit card information.)
  • Carry around only the cards you expect to use during that specific day. This way you minimize your loss if your wallet or purse is stolen.
  • Keep your receipts so you can check your bill charges.
  • Keep a record – in a safe deposit box – of all card information, in case you have to report a loss quickly.

Bad habits can stay on your credit report for up to seven years! Think about following these helpful guides to use credit cards wisely and not end up in the never ending cycle of debt.

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