If you’re like many Americans, you’ve developed a bad habit of whipping out your credit card to pay for purchases and figuring out how to pay the bill later. This is not the right way to use credit. The good news is that with a little education, you can change the way you use your credit cards. Read on to find out what to do.
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.
The reason why card companies suggest minimum payments is simply because this amount is how much they want you to pay in order for them to get the largest amount of money from you as possible over a longer period of time. Always pay above the minimum. This will help you avoid pricey interest fees in the long term.
Pay close attention to your credit balance. You should also remain aware of your credit limit. Exceeding your limit can result in significant unexpected fees. It will take forever to pay down your balance if you continue to go over your card’s limit.
Make a realistic budget to hold yourself to. You do not need to spend the entire limit on your card, even though it’s available. Know how much you will be able to afford to pay for that month so you can pay it off each month to avoid interest payments.
Don’t buy things that you can’t pay for on a credit card. A credit card isn’t the magical solution to getting the flat screen TV or new computer that you have always wanted. You will end up paying a lot of money in interest charges, and the amount you need to pay every month might be too much for you. Exit the store and mull over your purchase for a couple of days before making your final decision. If you still plan to buy it, the store’s in-house financing usually offers lower interest rates.
Make sure that you watch your statements closely. If you see charges that should not be on there, or that you feel you were charged incorrectly for, call customer service. If you cannot get anywhere with customer service, ask politely to speak to the retention team, in order for you to get the assistance you need.
Document everything you put on your card each month. Remember that incidental and impulse purchases add up quickly. If you aren’t paying attention to how much you already put on your credit card, at the end of the month you may not have enough money to pay off the bill.
Now that you’ve read this article, you know there’s a lot more to responsible credit card use, than just abstaining from using credit altogether. Reform your credit card habits, using the tips you have just read, so that your use of credit cards can help improve your credit scores, instead of interfering with you having good credit.