Advice When Using Your Credit Cards
9 Things You Must Know When Using Credit
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With great power comes great responsibility.

Credit cards are the same way.

They can help establish your credit and earn you free travel but if you don’t manage your credit responsibly credit cards can also damage your credit score and put you in some serious debt.

These helpful tips below will help you make a sound decision when using credit.

1. Comparison shop before applying for a credit card

Signing up for a credit card is a big deal.

This is not something to be taken lightly, and the card that is right for one person usually isn’t right for someone else.  Travel points, APR, introductory offers, how interest is calculated, and 0% balance transfer are all important points to consider.

Shop around for the best deal.  Stick with reputable companies.  Often if it is too good to be true and they’re an unknown company, it just might be too good to be true!

2. Keep a zero dollar balance

Pay your balance off each month whenever possible.

This is the best way to save you money (which you can spend on other things, or better yet save or invest).  There is a theoretical tax on your time and convenience has a high price.

It’s best to only spend what you have, and whenever possible pay your credit card off at the end of each month.

3. Keep your minimum balance low

This will help control your spending habits.  Keeping your credit maximum low gives you a ceiling to prevent overspending, and going into debt!

Be careful, as credit card companies will constantly try to get you to increase your credit limit as they want you to overspend!

4. Keep only the cards you use

By limiting the number of credit cards you have, you also limit the amount of debt you can accrue.

It’s far better to have one card with reward points that you take advantage of, then ten cards with reward points you rarely use.

Many different things make up your credit score, but having too many cards can actually hurt your credit score.

Side Note: If you don’t know what your credit score is you really should get a free copy of your credit report.

5. Avoid late payments! (Seriously!)

Even if you have to carry a balance, avoid making a late payment at all cost.

Even a single late payment can lower your credit score significantly, and justify raising your monthly- interest rate going forwards. This can cost you thousands of extra dollars and bully you for a long time.

So make your payments on time!

6. Take extra time with large purchases

Do you really need it? If you’re thinking about a big-ticket purchase on your credit card ask yourself (1) do I really need it? (2) can I pay this off when the bill is due?

If you cannot pay it off, consider setting up an automated savings plan and save up for the item over time instead of caving to the instant gratification.

If you’re in a pinch, or it is just an offer too good to turn down (and is time sensitive) consider signing up for a 0% interest credit card introductory offer.

7. Balance what you want versus what you need

If you’re an impulse spender, learn the triggers and then try to avoid them.

My biggest suggestion to impulse spenders to not carry their credit cards around.

Carry a single card with a lower balance around, for emergencies, but give yourself that extra time to think it over first. Your bank account and credit score will thank you!

8. Watch for fraud

Review your monthly statements and learn the learn how to protect yourself form credit card fraud.   Save your receipts and compare them to your statement.

It’s a bit of extra work, but you would be surprised how often retail can make errors.

9. Avoid cash advances

The cash is tempting, but the interest snowballs.  Avoid them at all costs.

How do you manage credit in your financial life?  Are you a cash only person or do you rack up travel reward points like it’s your job?  Leave a comment below and let me know.  

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