Advice on using Credit Cards

In the past, before credit cards, people had to save for things that they wanted.  Now credit is readily available for many people. This can be helpful if you use credit responsibly, but if not it is easy to get into trouble with credit cards.

Know the terms

Interest and finance charges often vary greatly between different companies. If you sign up for a credit card with a zero or low interest rate, make sure you know when that period is over. Once that period is over the interest rate can rise considerably; this will increase what you pay in interest charges each month.  The more you pay in interest, the more difficult it will be to pay off the principal balance.

Don’t charge more than you can repay each month

Some people use credit cards to get the airline miles or other rewards. Another reason people use credit cards is to have a better record of what they are spending their money on. To make the most of these benefits it is important to be able to pay the balance each month.  If you end up paying interest and finance charges, you may end up paying more in those fees than the benefits you received.

Is it worth the airline miles or rewards

If you use you credit cards for benefits such as airline miles but carry a balance from month to month you may pay more than if you were just to buy the airline tickets. 

Know your credit limits and debt load

There are some things about your credit cards that can affect your credit score. If your balance is near the top of your credit limit, then it can make your credit score drop. Also, if you carry a large amount of available credit it can also affect your credit score. Even if you don’t have any intentions of using available credit it can affect your credit score because the creditors don’t know that you won’t be using it.

Keep in contact

If you are planning on traveling out of the country, contact your credit card company. With some companies, if they observe unusual activity they may freeze your account, and then you will be stuck if you don’t have other cards with you.  Also, have your credit card numbers and contact information in a different location than your credit cards in case you lose them or they are stolen. If you have that information it will be easy to contact the company, and have the credit cards frozen so others cannot use them.

Credit cards can be helpful in some instances if they are used correctly.