Having a credit card does not have to be scary, nor should be looked down upon because you have one or more. The way you go about using that card is another story. Those that are irresponsible spenders and go outside of their means, not able to pay off the balance each month start to carry over a balance, pay interest, and just gets worse from there; sinking in credit card debt. For those that may be shy about having a card, here are four of the best ways to live with a credit card.
Use Credit Cards Only to Build Credit
The point of having a credit card is not to count is as extra available money, being able to spend whenever you want, but as a card not only for emergencies, but to build up your credit score. If you use the card each month for purchases and pay off the entire statement each month, it will show the lender that you are a responsible card holder, increasing your spending limit. The trick is, do not get fooled into being able to spend more. Use services like AAACreditGuide.com to see if the fruits of your labor are paying off.
Make Payments on Time
Not only are making your payments by the due date important, as it avoids going into a penalty interest rate and fees for being late, but if for some reason you are past the due date, make absolute sure that it is paid within 30 days of the statement date, otherwise it will be reported to the credit agency and you will be stuck on your report for the next seven years, affecting your score for the next two.
Don’t Max Out Limit Each Month
A large portion of your credit score is the total balance versus your available credit, so even if you pay the entire balance off each month, depending when it gets reported to the credit bureaus you may have your score reduced, with the lender thinking that you are maxing out your available credit.
Avoid Minimum Payments Only
The minimum payment requirement is just to please the lender, it does not have bearing on reducing your balance, as it probably barely covers the interest, so if you cannot pay off the entire statement balance, do your best to continue to throw extra dollar towards the balance until it is paid off completely and finally avoiding interest.