Credit cards can either be thought of as the best thing to ever happen to shopping or the reason for your debt, headaches, and sleepless nights. Credit cards are actually a wonderful tool -- when they are used responsibly. These tips will help you to stay on top of your debt and make sure that you are using your credit cards in the best way possible.
- Always pay your balance. Whenever possible, pay off your balance every month. This is the most important step. You do not need to carry a balance to build credit. It is never wise to only pay the minimum unless that is absolutely all you can do. Paying the balance off each month keeps the credit card companies from making money off you and allows you to keep that money!
- Keep track of how much you charge. If you can keep the receipts for all of your purchases, you will be able to keep track of the balance on your credit cards. You will then be able to keep your spending under what you can pay off. You can also check your credit card statements to make sure that they are correct.
- Keep track of your credit cards. Always keep your cards with you. Do not give duplicate cards to your children. Do not let your friends borrow them. Do not lend them to anyone.
- Don't pay off one card with another. Unless it's a really, really good deal (like 0% interest for two years!), don't pay off one credit card with another. This just shifts your debt and will usually get you further into debt.
- Don't pay late fees. Pay your bill before the due date, leaving time for the payment to travel in the mail and be processed at the credit card company's office. Paying your bill as soon as you get it in the mail will ensure that you don't lose or forget it. Late fees are expensive, and your APR can go up if you have even one late payment.
- Never max out cards. In fact, you shouldn't use more than 75% of your total credit limit. If you follow this guideline, you will still have some room in case of an emergency, and the interest on your balance will not cause you to go over your limit, which will cost you.
- Always check monthly statements. Credit card companies can make mistakes also. These mistakes are more easily remedied right after they happen and not months later. Keeping your receipts can help you prove that you are correct.
- Limit the number of credit cards that you own. Try not to have many cards. Don't be fooled by signing up for a card because you will get something free or because they offer a good APR. Keep your cards to the minimum necessary.
Credit cards are not inherently bad things. By using a credit card, you often get protection against theft, earn miles or cashback awards, and are eligible for certain discounts. Just make sure that you are benefiting from these purchases, not your credit card company!