We are quite a nonchalant society when it comes to credit cards. They’ve become so rampant, which pretty much explains why we have become so loose in spending than we should. The situation today is so bad than earlier times that credit card debt in on the rise.
To protect ourselves from overspending, we have to tighten our use of credit cards, and if we fail then bad things will happen. Debts can pile up so much that this can create immense psychological pressure to pay it off. Some of them won’t be able to pay it in full, and probably will file for bankruptcy.
Below are some tips that you can follow for using your credit cards smartly.
1. Pay off your credit cards
This is the most difficult thing to do, but the best solution to stay away from debt. Still, you’ll be surprised to see so many people not paying their credit card bills even if they can pay in full. If you have a credit card balance, even if it’s very little, pay it off as soon as possible. Though this may be inconvenient for you in the first, but it’s definitely worth the effort.
2. Pay more than the minimum required amount
Pay more the minimum required amount every month. If only pay the minimum amount, then you’re throwing out money not only by paying interest on the borrowed amount by also it take you longer to pay off your debts. By paying twice the required minimum amount you can pay off your debts within a few years.
3. Never max out your credit cards
Never max out your credit cards or near to your available limit. It’s true that using your card can positively impact your credit score, but if you max out your credit cards then it can have a negative effect on your score. Lenders look at your available credit and how much you’ve used it, when they determine your overall riskiness for loans and mortgages. It’s ok to have a balance, but keep it below 30%.
4. Stay away from cash advances
Unless you need cash for an emergency, stay away from cash advances. They have high interest rates and not worth the inconvenience.
5. Pay your bills on time
Never miss or delay a payment, no matter how bad the situation may be. Fees, charges and negative payment history aren’t the kind of things you need to see on your credit report.
6. Negotiate with your lenders
Check out the interest rates in other credit cards, and then negotiate with your credit card company about reducing your interest rates if it’s high. Don’t accept the rate they offered you as “best”, but call them and negotiate about it. Smart consumers do this each and every month.
7. Monitor your credit account
Develop a habit of checking your credit card accounts regularly. Monitor your purchases and balances and make sure they are yours. Doing this can help you point out fraudulent activity like identity theft and purchases you didn’t make.
8. Always use secure site when transferring credit card information
Hackers are out there ready to access your sensitive credit card info and use it. So, never send any of your credit card information via email, text message or else you’ll be exposing yourself to become a victim of fraud or identity theft. Always use a secure site when making payments.
9. Don’t close your credit account
One you’ve paid off your credit card debts, don’t close your account. This will result in a drop of your credit score, as this lowers your available credit, which is one of factors used in calculating your credit score. The higher your available credit is, which is not being used, the better your credit score is and to your creditors.