Do those words get you excited? Does your pulse go up and you think, “Sales!” Do you envision buying everything you ever wanted? If so, you may have to pull it together. Credit cards can be wonderful tools, but can also get you in some trouble. If you are a plastic fiend, you may have to cut up some cards to get on the right track.
One very important way to keep your credit cards under control is that you must pay more than the minimum each month. Even it is only $50 more, it will go a long way to saving you some of that nasty interest in the long run. By only paying the minimum on a 12, 15 or 18% card, you are basically trapping yourself into a very, very long time of card payments. Possibly even the rest of your life.
Not only should you pay more than the minimum, you should also keep an eye on the interest rate. Credit cards will give you low introductory rates and than start raising them. If you find yourself with a higher rate than you would like, who hasn’t, just call the company and see if they will give you a lower rate for a certain period of time. You can also see if any of your other cards, though you should only have a few, has any good deals that will allow you to transfer the balance and save some money. Although this is just delaying the payment, not solving your problems, it is still better than paying huge interest fees.
Something to definitely avoid in a card is a yearly fee. This rarely occurs anymore with Visa or Mastercards, but just be on the lookout. Also, credit cards offer protection for fradulent use, so don”t be sucked into any extra fees for added protection. They should be helping you as it is! Buying a shredder is another way to protect yourself, make sure to shred all statements after you pay them. Or just sign up for paperless statements online, most card offer this.
Using credit cards to build a credit history is a great idea as long as you keep them under control. Once you begin living within your budget and are confident that you can handle the plastic, start paying with most of your monthly items with your card. Then, pay it off every month. Before you know it, your credit history will be looking pretty good. Make sure you cancel any credit accounts you still have open but do not use, your credit score doesn’t really like that. You should also obtain your credit history to check on how you are doing. Checking this yearly is a good idea.
Many cards offer rewards to users. These can range from 1% back at the end of the year to points, spendable at stores. The Disney card is a nice one for parents, you get 1% back in Disney bucks and trust me, you will spend them.
Another benefit of a credit card is most allow you to download your transactions straight into your financial software, whether it be Quicken or just a spreadsheet. Most of your transactions will be categorized so you can easily sort them and see how you did in a month or over a longer timespan.
Above all, remember that your credit card habits will be passed onto you children so make sure you get them going on the right track and not into 50 years of interest payments on that flat panel television and playstation.