Credit cards can be extremely dangerous. By spending too much, you are opening yourself up to high borrowing costs and interest rates. If used the right way, credit cards can be very beneficial. Read this article to learn of the positive side of credit cards.
It is a good idea to have a couple of open charge cards. If you can pay your bill in full each month, this number of cards will help you to improve your credit score. Do not over-do it. Having more than three credit cards can concern a lender looking at your credit report.
The reason companies have low minimum payments is so they can charge you interest on everything on top of that. Whenever you can afford to, send in payments that exceed the minimum amount. By doing this, you will avoid paying high amounts of interest that can really add up in the long run.
Create a spending budget for your credit cards. Budget your credit just like you budget your income. Never get into the habit of seeing credit cards as extra money. Decide how much you can afford to pay your credit card company, and do not charge more than that amount every month. Stay within your budget and pay any balance off each month.
Keep a close eye on your credit card balance. Be sure that you’re aware of what kind of limits are on your credit card account. The fees will really add up quickly if you spend over your limit. If fees are assessed, it will take a longer period of time to pay off the balance.
Read emails and letters from your credit card company upon receipt. Credit companies can make all kinds of changes to interest rates and fees; they just have to provide you with written notification of those changes. It is within your rights to cancel the card, if you don’t wish to agree to the changes.
Avoid the temptation to lend your charge cards to anyone. It could be a very good friend that is in need of one thing or another, but it is not a very good idea to lend it out. It can lead to over-limit charges if your friend should put more on the card than you had authorized them to.
A secured credit card may be an option you want to look into if your credit score is in trouble. Secured cards require you to pay a certain amount in advance to get the card. In other words, you will be borrowing money that is yours while paying interest for this privilege. The advantage is that responsible use of an unsecured card is an effective way to improve your credit score. Stick with good companies that have a reputation when you apply for a credit card. Eventually, the company may offer you a normal, unsecured credit card. That will do even more to improve your score.
Don’t be tempted to pay off the balance on your card immediately after using it. Instead of paying right away, only pay when your statement comes in. Then you can pay the full balance to be done with it for another month. This has a positive impact on your credit record and can improve your score.
Do not open and close credit cards frequently. Don’t switch to another credit card account unless you really have to. The length of your history with a creditor is one factor in your credit score. Keeping accounts open for as long as possible will help build credit.
Avoid charging things like groceries or restaurant tabs on your credit card as these can take a while to appear on your monthly statement, which means possibly underestimation the balance you really have available to you. This can lead to you spending more money since you will have the perception that your balance is actually lower than it is.
Try and negotiate the interest rates of your credit card. In many cases, you may be able to successfully negotiate a lower rate with your creditor. If you’ve made consistent payments and are a responsible customer, you will probably get a reduced annual percentage rate if you are willing to ask for one.
If your credit is strong, but your credit cards have high interest rates, consider requesting a rate decrease from your issuer. Sometimes they actually will do this. You will save each month in which you have a balance.
Consider closing out the accounts associated with charge cards that you don’t really use anymore. If you have a lot of accounts open, it is easier to be a victim of fraud. It is possible to close accounts that have balances, as well. You simply pay the balance off after you close the account.
Charge cards can provide many benefits when used in a smart way. From the peace of mind of having some flexibility and emergency space, to the possibility of racking up perks and rewards, the credit cards now or soon to be in your wallet can actually make your life a brighter one. Use the things you’ve learned in this guide to have a good credit rating.