The problem of credit card debt is very real and cannot be overlooked. Statistics show that the average credit cardholder carries an outstanding debt of about $8,000. How can you make sure that you will not fall in the snare of bad credit? In this article, let’s discuss the do’s and don’ts of using credit cards.
Do pay on time. If you want to use a credit card, be sure that you can pay on time. Keep in mind that timely payment is the only way you can avoid additional finance charges.
DO charge only what you can pay. Before using your credit card for any transaction, check your due date of payment. Will you be able to pay your complete balance on time? How do you plan to pay off that particular purchase?
DO pay your full balance. Instead of submitting only the minimum monthly due, leaving it’s best to pay your full balance to avoid interest rate fees and protect your personal credit.
DO check your monthly bill. Do you review monthly billing statements from your credit card issuer? Before posting your payment, make sure that all charges in your account are accurate. If you do not receive your bill on time, call up your Issuer immediately and ask for an update.
Don’t maximize your limit. To be safe from bad credit, it’s best to keep your charges minimal. Ideally, do not use more than 50% of your available credit. By doing so, you can make a good impression to potential creditors to whom you have sent applications to.
Don’t carry all your cards in your wallet. If you own a number of credit cards, it’s best not to bring them all, especially if you plan to shop. Having too many credit cards that you can use may only encourage overspending. In addition, you will have a hard time calling up each credit card company in case your wallet gets lost or stolen.
Don’t close old cards. Be careful about closing out your oldest credit card accounts as doing so would mean erasing the oldest parts of your personal credit history. If you have a new credit card with a better rate, you can still keep your old credit card active by using it exclusively for small purchases.
Don’t transfer huge balances into one card. Transferring balances to a zero interest credit card is a good strategy but you need to make sure that you are not maximizing the cards’ credit limit. Remember that maximizing your limit can pull down your credit score.
About the Author
Tara Tiemann is a credit analyst for Go-prepaid.com which has been a resource site for people who want to live debt free. If you are on a budget using prepaid debit cards,prepaid credit cards and prepaid cell phone service can save you big money!