There is no denying the fact that credit cards can indeed, be part of a smart financial strategy. The important thing to remember is that they must be used wisely and deliberately. By using the ideas in this piece, you will arm yourself with the information necessary to make the types of decisions that will pave the way to a secure financial future for you and your loved ones.
Do not use your credit cards to make emergency purchases. Many people believe that this is the best use of credit cards, but the best use is actually for things that you purchase on a regular basis, like groceries. The key is, to only charge things that you will be able to pay back in a timely manner.
Know what interest rate your card comes with. This is information that you should know before signing up for any new cards. If you are unaware, you may end up paying far more than the initial price. This may result in your inablilty to pay off your credit cards monthly.
Avoiding late charges is important, but you also want to avoid going over your limit because you will be charged for that as well. Incurring debts beyond your credit limit can have negative repercussions on your credit score as well as expose you to expensive penalty fees. Pay attention and make sure you stay under your credit limit.
Carefully look over your balance and statement. Also be aware of what your credit card spending limit is and adhere to it. Going over your credit limit will raise your fees and your overall debt. It will take forever to pay down your balance if you continue to go over your card’s limit.
Credit cards should always be kept below a specific amount. This total depends on the amount of income your family has, but most experts agree that you should not be using more than ten percent of your cards total at any time. This helps insure you don’t get in over your head.
Be sure to get assistance, if you’re in over your head with your credit cards. Try contacting Consumer Credit Counseling Service. This nonprofit organization offers many low, or no cost services, to those who need a repayment plan in place to take care of their debt, and improve their overall credit.
Always know what your utilization ratio is on your credit cards. This is the amount of debt that is on the card versus your credit limit. For instance, if the limit on your card is $500 and you have a balance of $250, you are using 50% of your limit. It is recommended to keep your utilization ratio of around 30%, in order to keep your credit rating good.
Always memorize any pin numbers and passwords for your bank or credit cards and never write them down. Keep it stored in your head so that nobody else can access it. Writing your pin number down increases the chance that someone else uses it.
It should be obvious, but many people fail to follow the simple tip of paying your credit card bill on time each month. Late payments can reflect poorly on your credit report, you may also be charged hefty penalty fees, if you don’t pay your bill on time.
It can be tempting to use credit cards to purchase things that you cannot, in reality, afford. That is not to say, however, that credit cards do not have legitimate uses in the broader scheme of a personal finance plan. Take the tips in this article seriously, and you stand a good chance of building an impressive financial foundation.