Credit Card Strategies – Avoiding the Traps

by Susanna Hamilton, Contributing Editor on September 10, 2011

Credit Card TrapsCredit Card Strategies – How to Avoid the Dangers:

Whether you love them or hate them, credit cards are pretty much an essential part of life.  By using them wisely you help build your good credit rating. A good credit rating will be extremely important throughout your life in obtaining a mortgage, an auto loan, or pretty much financing for any purpose.

Not to mention the fact that paying with credit cards is so much more convenient and secure than carrying cash.  But, there are a number of important lessons you should learn about credit cards.  Read on, and discover how you and your credit card can have a mutually beneficial long term relationship!

Less is More:

We’ve already said that using credit cards responsibly helps you to build your credit score.  Having a couple of cards or even several cards contributes nicely to accomplishing this.  However, do not make multiple applications for cards from several different providers in a short period of time. The rule of thumb is never apply for more than one or two credit cards in any 90 day period.

Each application will trigger an inquiry on your credit file. Applying for too much credit in too short a time will give lenders the impression that you are about to go on the spending spree of all spending sprees. This will make you look like a risky proposition, and you will not be approved for the credit you want.  Also, having lots of cards can often times make it easier and more tempting to spend more than you can reasonably afford.

Zero Interest Doesn’t Last Forever:

Who wouldn’t want a credit card charging 0% interest?  That sounds too good to be true!  Well, it is and it isn’t.  Yes, zero interest really is available as an introductory rate on some credit cards.  But, you must remember that an introductory rate is just that.. introductory!  After the intro period has expired, your rate will go up to the normal rate.. and unless you’re prepared for it you’re likely to get caught short.

Always Pay On Time:

This is the most important part.  You might get away with a late payment once, but don’t make a habit of it.  Failing to make your payments on time will have a huge negative impact on your credit score.  And, you’ll get hit with late payment fees as well as possibly having your rate increased to the punitive penalty interest rate, often approaching 29%.  If you know you’re going to miss your payment date, let the credit card company know and they may be a bit more flexible if it’s the first time this has happened.

Spend Wisely:

It’s easy to give into temptation when all you have to do is get out your credit card.  Somehow it seems less guilt inducing than handing over hard cash.  But, it all has to be paid for eventually. And, if you’ve gotten into the habit of revolving debt, carrying over a balance each month, you’ll soon be using your entire credit limit.  This will have a negative impact on your credit score due to high credit utilization, and could result in penalty fees from your credit card provider as well.

Check Your Statements:

It might not be as exciting as the latest best seller, but a careful read through of your monthly credit card statement will serve you well.  Not only will you be able to pick up on any possible errors.. such as a transaction going through twice.. you will also see exactly what fees are being levied, and you will be able to verify and check that everything is being charged correctly.

Sometimes fraudsters use credit card details to make purchases that are relatively small, in the hope that the cardholder won’t notice and thereby alert the issuer.  Go through your statement line by line and don’t let anyone get away with running your credit card balance up unnecessarily!

 

Article Courtesy of Credit Card Approval Center

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