Credit Cards Do’s and Dont’s
There is a lot of truth in the advice that credit cards are not a substitute for not having money. It may make you feel great to buy something with a credit card, but the bill will come the next month and it will be time to pay the piper. Every time you use a credit card this should be the theme replaying in your mind. And you would do good to remember the following too.
Do’s.
Always plan for the purchases that you need to have and those that you just weant to have. You always need the essentials, and you want everything else. The ability of making a distinction might help you plan your purchases wisely.
If you are caught up in financial difficulties, it is alwaysa good idead to talk to the issuer of your card who might re-schedule your payments. If you simply default, that will only make matters worse as it only helps to build up an unfavorable credit history. This may lead to an increase in the interest rate on the baances and you might find yourself being denied credit the next time.
Unless it is an emergency, if you stay within your credit limits you will be in the best shape. If you must spend over the limit, under extreme circumstances, ensure you are within the manageable levels, say within 30 percent of your existing limit.
And if your mail is filled with more favorable deals than you currently are enjoying, you may talk to your current card holder and ask for a better deal. They want to retain you as their customer as that is how they can offer credit to others, so they will listen.
Dont’s
Do not use your credit card to make house hold purchases unless you are going to pay the balance in full each month. It’s expensive in the long run if you don’t as you will be paying interest on everyday expenses.
Do not just pay the minimal amount every month. You will end up paying a lot in interest charges. The faster you clear the debt the better.
Do not use the credit card to buy things you can’t afford. This will only exacerbate any financial issues you are currently experiencing.
Low interest credit cards like the Citibank Clear Credit Card can be a tremendous asset if they are used appropriately. While people always like to talk about credit cards and how they are the best way to ruin your personal finances, they can work to your advantage.
read a great analogy once (I think it was from Trent at TheSimpleDollar.com) that compared credit cards to power tools. Sure, they make things convenient, but they can be dangerous in untrained hands.
Credit card defaults are up and are expected to reach 9-10 percent by the end of 2009. It’s partially because of this continued poor performance that credit card issuers continue to modify the terms of credit card accounts in an attempt to make money.
April 2nd, 2009 at 8:49 pm
[...] thing credit cards have going for it is the fact that you can keep a record of your transactions, and it is there easy [...]
February 5th, 2010 at 7:21 pm
I like your blog. I have been reading a lot here. Thank you for all your work!