Credit cards are a ubiquitous part of most people’s financial picture. While they can certainly be extremely useful, they can also pose serious risk, if not used properly. Let the ideas in this article play a major role in your daily financial decisions, and you will be on your way to building a strong financial foundation.
Many people wonder if it is better to have one credit card or many. For most people, it is best to have two or three credit cards open. This can help you to build a credit history and improve your credit score, as long as you are sensible with the use of these cards. Having tons and tons of credit cards, however, will not look very good to lenders.
Shop around for a card. Interest rates and terms can vary widely. There are also various types of cards. There are secured cards, cards that double as telephone calling cards, cards that let you either charge and pay later or they take out that charge from your account, and cards used only for charging catalog merchandise. Carefully look at the offers and know what you need.
You should develop a budget for your credit card usage. You should already have created an income budget, so include credit cards in that budget. Your credit card isn’t surplus money; it’s part of what you have to pay. Know how much you have allotted each month and keep a close eye on your spending to ensure you stick to it. Don’t go over that amount, and pay the balance off every month.
If you are looking to open a credit card though you do not have any type of established credit, finding someone to co-sign for you can do the trick. A friend that you trust, a parent, sibling or anyone else with established credit can be a co-signer. They will have to accept the responsibility to pay off your debt if you fail to meet your obligations. This is a fine way to start building up your credit score with a credit card of your own.
When you are applying for a credit card, only consider those with a low interest rate and no annual fee. There are many options that don’t have annual fees, so it is silly to choose a card that does.
Consider unsolicited credit card offers very carefully before you accept them. If an offer that comes to you looks good, read all the fine print to make sure you understand the time limit for any introductory offers on interest rates. Also, be aware of fees that are required for transferring a balance to the account.
Students who have credit cards, should be particularly careful of what they use it for. Most students do not have a large monthly income, so it is important to spend their money carefully. Charge something on a credit card if, you are totally sure you will be able to pay your bill at the end of the month.
You may want to consider using layaway, instead of credit cards during the holiday season. Credit cards traditionally, will cause you to incur a higher expense than layaway fees. This way, you will only spend what you can actually afford during the holidays. Making interest payments over a year on your holiday shopping will end up costing you far more than you may realize.
Do not use your credit cards to pay for gas, clothes or groceries. You will find that some gas stations will charge more for the gas, if you choose to pay with a credit card. It’s also not a good idea to use cards for these items because these items are things you need often. Using your cards to pay for them can get you into a bad habit.
When you receive a replacement credit card in the mail, cut up your old one, and throw it away immediately. This can prevent your old card from becoming lost, or stolen, allowing someone else to get hold of your credit card number, and use it in a fraudulent way.
If you are denied a credit card, find out why. It costs nothing to check the reporting agencies, after you have been denied credit by a card issuer. Recent federal laws require that issuers supply the information that creditors used to deny an applicant. Use this information to improve your score in the future.
If you have more than one credit card, try to pick one to pay off every month. Even if there is a great deal of debt related to your other cards, your credit history will benefit from having one active card that is paid in full each month.
Consider closing unused credit card accounts. Having many unused cards makes identity theft easier. You may also have to pay annual fees even if you no longer use that card.
Be aware of the dangerous allure of high credit limits. The realization that you can purchase many items just by swiping the card can build up your urge to do just that. Spending to the limit can get you into deep debt very quickly. Reduce impulse purchases by taking at least 48 hours to think over any large purchases before placing an order.
Just about everyone has used a credit card at some point in their life. The impact that this fact has had on an individual’s overall financial picture, likely depends on the manner in which they utilized this financial tool. By using the tips in this piece, it is possible to maximize the positive that credit cards represent and minimize their danger.