With the way the economy is these days, you really need to be smart about how you spend every penny. Credit cards are a great way to make purchases you may not otherwise be able to, but when not used properly, they can get you into financial trouble real quickly. Read on for some great tips for using your credit cards wisely.
Obtain a copy of your credit score, before you begin applying for a credit card. Credit card companies will determine your interest rate and conditions of credit by using your credit history, among other factors. Checking your credit score before you apply, will allow you to make sure you are getting the best rate possible.
When making purchases with your credit cards you should stick to buying items that you need instead of buying those that you want. Buying luxury items with credit cards is one of the easiest ways to get into debt. If it is something that you can live without you should avoid charging it.
Don’t fall for the introductory rates on credit cards when opening a new one. Be sure to ask the creditor what the rate will go up to after, the introductory rate expires. Sometimes, the APR can go up to 20-30% on some cards, an interest rate you definitely don’t want to be paying once your introductory rate goes away.
Make sure to schedule a spending budget when using your credit cards. Your income is already budgeted, so make sure you make an allowance for credit card payments within this. It is unwise to consider credit as being some additional, unrelated source of funds. Decide how much you can afford to pay your credit card company, and do not charge more than that amount every month. Adhere to your budget, and pay the balance off every month.
An important aspect of smart credit card usage is to pay the entire outstanding balance, each and every month, whenever possible. By keeping your usage percentage low, you will help keep your overall credit score high, as well as, keep a substantial amount of available credit open for use in case of emergencies.
If you have several credit cards with balances on each, consider transferring all of your balances to one, lower-interest credit card. Almost everyone gets mail from various banks offering low or even zero balance credit cards if you transfer your current balances. These lower interest rates usually last for 6 months or a year. You can save a lot of interest and have one lower payment each month!
Credit cards are usually tied to loyalty accounts. If you utilize a credit card on a regular basis, you should locate a beneficial loyalty program that suits your needs. Over time, the perks add up and will give you some great additional income or discounts.
As stated previously, you really have no choice but to be a smart consumer who does his or her homework in this economy. Everything just seems so unpredictable and precarious that the slightest change could topple any person’s financial world. Hopefully, this article has you on the right path in terms of using credit cards the right way!