If used correctly, credit cards can garner some fantastic perks from the points you earn, like vacations and low-stress finances. People who are not wise will charge the vacation to their credit card and then stress out later about how they are going to pay for that. Here are some great ways to use your card wisely to get the most benefit from it.
Don’t cancel a card before assessing the full credit impact. It is possible to negatively impact your credit report by closing cards. In addition, it’s good to keep the charge cards associated with your credit history active and in good standing.
Check whether there is an annual fee attached to your credit card, to make sure you aren’t overpaying for a premium card. Annual fees for black or platinum cards can range from $100 to $1000 depending on the card’s exclusivity. If it is not necessary for you to have an exclusive card, avoid fees by not getting one.
Do not forget to factor in your bank cards when creating a budget. You should already have created an income budget, so include bank cards in that budget. Bank cards should not be viewed as “extra” money. Set aside a specific amount that you can safely spend on a card every month. Adhere to that budget, and pay your balance in full each month.
Check your balance carefully when your statement arrives. You should also be sure to know that you are aware of the limit that your creditor has given you. If you inadvertently go over your credit limit, you will either be heavily penalized or your credit card will be blocked. This will make it incredibly difficult to repay your balance.
Don’t buy things that you can’t pay for on a credit card. Wanting a new TV or game console is not a good reason to put it on a credit card. You will pay a lot of interest and monthly payments that you could not pay for. Walk out of the store, think about it for a few days, and then arrive at a final decision. If you are still set on buying it, you are probably eligible for the store’s financing program that will save you money in interest over the credit card company.
Never let anyone else use a credit card that is in your name. You may trust your friend, but it can cause problems. It is never a good idea to let friends use your card. This can lead to overcharges and unauthorized spending.
Never believe your offered interest rate is absolute and should remain this way. Credit card companies are in major competition with each other, so different companies will offer different rates to their potential customers. You can contact the band and request a lower interest rate, if you think it is too high.
Most experts agree that the maximum limit on your credit card should not exceed 75% of your monthly salary. If you have credit limits that are more than you make every month, you need to start paying off that debt right away. If you don’t the interest you pay could quickly get out of control.
Even cards without rewards, points, and perks that apply to vacations can better your life. People that are not smart about using their cards will be happy temporarily, but that will not last once the debt piles up. Use the information you have learned here to be in the group you want to be in.