10 Ways To Correctly Manage A Credit Card
Posted on September 20, 2007
Credit cards are one of the biggest risks we take in personal finance. They add exceptional convenience to our lives, but one missed payment gives the company the right to have interest rates skyrocket and give your credit score a hit. However, there are steps that can be taken to ensure your credit stays intact and you do not have problem with credit cards:
- Always pay on time. This may seem obvious but many of us our guilty of accepting a late fee to hold out paying until the next paycheck.
- Ask for the late fee to be removed. Should you have a late fee assessed immediately call and ask to have it removed. This will not work if you continually are late, but for the first one or two times they should remove it.
- Seek out low APR cards. Unless you are very disciplined and pay off your balance each month you will want to find the lowest APR cards.
- Avoid credit card cash advances. Purchases with a credit card accrue interest after the next billing cycle that the balance is not paid. Cash advances accrue interest immediately. If you must get a cash advance pay it off as soon as possible.
- Ask for a better rate. It never hurts to ask, all they can do is say no. So no matter how bad your situation you should always take a shot at asking for a lower rate. The credit card companies are making astronomical profits so it is not going to hurt their bottom line, and the customer service reps often have a lot of flexibility to save you money. Be persistent if necessary, everything is negotiable.
- Monitor your balance and purchases online. I think this is pretty commonplace now, but get into the habit of logging into your credit card’s website every few days to make sure there are no fraudulent charges and ensure you know the current balance due to prevent overspending.
- Use for emergency only. If you are not disciplined enough and are overspending, put the credit card away and use it only for emergencies. I have a credit card that earns points and love accruing the points, so as a result I use the credit card for all my daily purchases. However, I make sure to pay the balance off throughout the month. If I were to make a mistake and forget to pay my interest rate would skyrocket. I am willing to accept that risk, but if you are not comfortable with the risk, then use the debit card that takes money directly out of your checking so you know to stop spending when you are out of money.
- Know your benefits. Many cards come with rental car insurance policies, return protection, and other benefits. Make sure you are aware of any you may possess so you do not loose out.
- Set up email alerts. Setting up email alerts to notify you of when payments are due will ensure you are not forgetful one month.
- Do not have more than three cards. There is not an actual magic number of cards you should or should not have. However, having more than three cards gets complicated. I use one credit card that earns points for all my daily purchases, then I have two other credit cards for emergency only. Making purchases on multiple cards can get complicated when each has different due dates. Keep it simple and use one card so you only have one payment to make at the end of the month.
Related Posts
Carnival of Personal Finance #99 SummaryHOW TO: Destroy Your Credit ScoreHOW TO: Earn $450 In 15 Minutes» Filed Under Credit Cards
Comments
4 Responses to “10 Ways To Correctly Manage A Credit Card”
Leave a Reply
Great tips. Here’s the two that I would add:
11. Always pay your full balance and never carry a
balance.
12. Shred them before they shred you
glblguy: Thanks for adding two very relevant additional bullet points. You are right as those are fundamental traits of using a credit card. Ensure it is paid in full and if you cannot stop using it, then get rid of it until you have it paid off.
[…] With Me presents 10 Ways To Correctly Manage A Credit Card. You’ll find steps that can be taken to ensure your credit stays intact and you do not have […]
It’s often better to use your credit card sparingly and KEEP a balance, at least for a month. That forces the credit card company to report your credit standing to the bureaus more often. If you never have a balance, it will show as inactive, and your credit report won’t get updated.
You’ll also find on some credit cards they don’t accurately track the high balance/credit limit. So you have to max the card once, and then pay it off. That will boost your credit score as well. You’ll know that you need to do this if your credit report tells you that your credit limit is say $50 when you actually have a $5,000 credit limit.
Hope this helps.