Do you appreciate just how powerful those pieces of plastic in your pocket are? Very few people think about all of the powers and repercussions that are related to credit cards.
We are so accustomed to having Credit Cards, no one really thinks about how important these cards are. Here’s what to keep in mind. Using credit cards responsibly can help you build good credit and have great buying power. Incorrect credit card usage can lead to credit card debt, overwhelming credit card bills, and a bad credit record that can take years to restore.
The best way to keep your credit cards on the good side of your financial life is to not make the common mistakes that may turn them to the dark side.
Don’t Have Too Many – How many credit cards do you have? Many people sign up for every card offered by each gas station, department store, and other lender that comes along. They think it’s impressive to have more cards. But in reality, a lot of credit card accounts can have a negative effect on your credit report. Credit cards, in your credit report, are all counted as liabilities. The more you have, the more of a risk you become, and therefore the lower your credit score. In order to stop too many credit cards from giving you bad credit, you need to close some of those accounts.
Control Spending Habits – It’s easy to get used to being able to say ‘charge it’. Many people figure a few charges here and there are not a big deal, but if you do the math you’ll see things differently. A $7 breakfast on Monday, $6 specialty coffee on Tuesday, $5 snack on Wednesday and $14 for a movie ticket, popcorn and a drink on Friday comes up to $32 a week. Do that every week of the month and you’ve added $128 to your credit card debt each month.
Know what you’re paying – Once you start to pay more attention to what you are charging on your card, it’s time to pay more attention to what you are paying on your card, in charges from your credit card company. From interest to other finance charges, you should find out what you are being asked to pay by the credit card company. Learn your grace period and try to pay off your balance in this time frame, so you are not hit with interest charges.
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