Tools and Tips
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Credit Cards 1015 Tips on How to Use a Credit Card WiselyDon't Get Caught Up in the Credit Card MorassBy Mindy
BillSavings.com Brief:
Read over these five tips on how to use a credit card wisely. You just might come across advice that helps you put money back in your pocket.
Credit cards are a lot like a Dr. Jekyll and Mr. Hyde situation. On one hand, they can mean quite a bit of convenience when making purchases. After all, credit cards free you from having to carry cash in your purse or wallet. They also make it possible to buy things over the phone or online, both of which are difficult to do if cash is your only option. There are many additional benefits to using credit cards, but with those benefits come risks. Most dangerous of these risks is the very thing that makes credit cards appealing – their convenience. Too often, credit cards become too convenient and people find themselves spending money they don’t have. This leads to an accumulation of debt which can gradually turn into serious financial problems. Fortunately, it is possible to use a credit card wisely. Below you’ll find the top five tips on wise credit card use, along with a few tricks to making sure your credit card spending habits don’t ever become a nightmare. Tip #1: Pay off your entire balance when it’s due Some would argue that this tip goes against the very point of using a credit card, but quite the opposite is true. The only truly smart way to use a credit card is to pay off your balance in full every month by the date due. Paying your balance in full offers you two advantages. The first is that you still enjoy the convenience of using a credit card. This includes the freedom from not having to pay cash along with the benefit of having all your transactions neatly recorded for you. The second benefit comes into play when you use a card that offers cash back bonuses or perks like frequent flyer miles. By regularly using your credit card, it becomes easy to accumulate rewards. And as long as you’re paying your balance in full and on time, you won’t be hit with finance charges or late fees. Essentially, when you pay your card in full every month, any bonus you get from the card is exactly that – a bonus. If you were to pay less than the total amount due, you’d essentially be handing over money that effectively cancels out any bonus you receive. If you’re completely unable to pay off your total credit card balance, start to pay off more than simply the minimum due on your card. Gradually increase your payments until you’re handing over as much as you can afford – only then are you likely to pull yourself out of credit card debt. Tip #2: Get a credit card that actually pays you back If you are going to use a credit card, make sure you get one that offers you rewards you can actually benefit from. Some credit cards offer frequent flyer miles while others give cash back bonuses. Still others convert each award dollar earned into a gift card to a specific store. If you have a card that offers rewards you aren’t likely to use (such as a gift certificate to a store where you won’t shop), cancel that card and search for a new one. Get one that affords you perks you can actually make use of. Tip #3: Limit yourself to only a few credit cards There’s really no good reason to have more than two or three credit cards. Having any more than that not only increases your temptation to spend, it also puts you at greater risk for identity theft. Choose your few cards carefully. Along with getting cards that offer the kinds of rewards you want, opt for a variety of issuers. Because not all stores accept every kind of credit card, it’s wise to have a card from at least one of the major issuers (e.g., Visa or MasterCard). From there, choose cards you’re most likely to benefit from – American Express, Discover, or even a credit card from a local vendor. Tip #4: Carefully check your statements for errors One of the most convenient factors of having a credit card is that all your purchases get listed and categorized for you. This affords you the opportunity to check for errors or for fraudulent activity. Take advantage of this and carefully look over each monthly credit card statement you receive. Check to make sure the right charges were recorded from the right vendors. If you find any errors or any extra expenses on your account, it’s feasible that your account information got compromised and that you are a victim of identity theft. If you suspect this, contact your credit card company immediately. Tip #5: Keep records of credit card accounts in a safe place If your credit card is ever lost or stolen, you’ll need to contact your credit card company as soon as possible to have the card canceled. To do that, you need to know your card account number and you must have a way of getting in touch with your company. The best way to safeguard your credit cards is to make copies of the information contained on both the front and back of the card. Keep that information in a secure place so you can access it should the need ever arise. 3/23/2009
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