Some people view credit cards suspiciously, as if these pieces of plastic can magically destroy their finances without their consent. The truth is, however, credit cards are only dangerous if you don’t know how to use them properly. Read on to learn how to protect your credit if you are using credit cards.
Do not use your credit card to make purchases or everyday items like milk, eggs, gas and chewing gum. Doing this can quickly become a habit and you can end up racking your debts up quite quickly. The best thing to do is to use your debit card and save the credit card for larger purchases.
Decide what rewards you would like to receive for using your credit card. There are many options for rewards that are offered by credit card companies to entice you to applying for their card. Some offer miles that can be used to purchase airline tickets. Others give you an annual check. Choose a card that offers a reward that is right for you.
Pay 100% of your credit card bill each month if you can afford it. You should only use credit cards for convenience and you should always pay the full amount when it is due. Using the credit is good for your credit score, and paying off the balance ensures that you will not be paying finance charges.
Carefully consider those cards that offer you a zero percent interest rate. It may seem very alluring at first, but you may find later that you will have to pay sky high rates down the road. Learn how long that rate is going to last and what the go-to rate will be when it expires.
Instead of just blindly applying for cards, hoping for approval, and letting credit card companies decide your terms for you, know what you are in for. One way to effectively do this is, to get a free copy of your credit report. This will help you know a ballpark idea of what cards you might be approved for, and what your terms might look like.
Watch out for changes to the terms and conditions on your cards. Often, you will find credit companies changing their terms or conditions on a regular basis. Often, the changes that most affect you are buried in legal language. Every time you receive a statement, read every single word of the language; the same goes for your initial contract and every other piece of literature received from the company.
Never apply for more credit cards than you actually need. It’s true that you need a few credit cards to help build your credit, but there is a point at which the amount of credit cards you have is actually detrimental to your credit score. Be mindful to find that happy medium.
As you can see, credit cards don’t have any special power to harm your finances, and in fact, using them appropriately can help your credit score. After reading this article, you should have a better idea of how to use credit cards appropriately. If you need a refresher, reread this article to remind yourself of the good credit card habits that you want to develop.