Credit Cards: How to Keep Your Head Above Water
Thursday, August 6th, 2009Sometimes, it’s easy to get caught up in the world of credit cards. There’s a sense of power behind having credit at your disposal to be used however you wish. The problem with having this power is that at times, many people abuse it. First, you get one card. But soon your wallet is overflowing, and you are drowning in debt. Here are a few tips to help you avoid this, and save yourself a lot of trouble.
Limit Yourself: Just because someone offers you a card to their store, it doesn’t mean you have to accept it. Many department stores will offer you an initial rebate, plus future deals if you open up a credit card with their company. This may seem like a way to save money, but if you take advantage of all of these cards you’ll be swimming in credit card bills before you know it. Even worse, you may not keep track of what you’ve spent as easily. You could wind up spending ridiculous amounts of money without even knowing it, and then you’re stuck paying the bills. Stick to one primary card, and if you do decide to open up a store card, follow the next step.
Pay Off and Close: If you decide to open a card directly at a store, make sure to limit the amount of credit that you open on it. The best time to open a card is when making a large purchase. Usually electronics stores are the best places to do this. Once you pay off the debt on the card, close it. Even though having too much debt can be bad for your credit score, the same goes for having too much open credit.
Watch Out for Interest Rates: Many places will offer you cards that seem like great deals, and at the time they might just be, but soon companies may start to price gouge you. You may start with a 4% interest rate, but soon enough you could get as high as 10-20%. This is why it is always best to get one card through your bank or credit union and keep it paid down. With fluctuating interest rates, having many cards could leave you in the hole.
Be Careful Online: A lot of people use their credit cards to shop online, but this can be one of the more dangerous things that you do. Buy something from the wrong place, and your information could be spread all over the internet. Always verify that the site is legitimate, and NEVER let anyone use your credit card to purchase something. You and only you should have access to your credit card number. This way you always know where your money is being spent.
Don’t Only Charge to Your Card: A lot of people make all of their purchases with their credit cards. This keeps them constantly in some form of debt. The best way to use your card is for big purchases, or during emergencies. Otherwise, use your debit card or straight cash. Having a hundred small purchases on your card will take up the space that you may need in the future for a large item. If you can keep your credit card debt under control, you will keep peace of mind, and money in your pocket.
Pay Off Each Month: Try to pay off more than the minimum each month on your card. You should budget out a certain amount from each of your paychecks to use specifically to pay off your credit card. If you try to spend the same amount on the card that you pay off each month, you’ll keep your head above water and have the credit available in case you ever need to make a large purchase.
If you ever find yourself struggling with credit card debt, learn to put it away. Pay for your purchases with cash, and pay off one card every chance you get. The best way to do this is to use your tax return when it comes. Remember, once you pay off a card, close it. That way your credit score will stay high, and the card won’t be there to tempt you anymore. Follow these tips, and you should stay out from credit card debt and be in the clear.
