Credit cards have always been difficult for some people to use not because the plastic is a problem but because many people aren’t sure what to do with the card when they get it. There are many credit card do’s and don’ts that are important to know. They can keep you out of trouble in the long run.
Credit Card Do’s
Be responsible — many people get a free card offer and they use it without looking at the FICA or other information that comes with the card. They focus on the fact that it has 0% interest but they don’t see that this is just for a limited time. Be responsible by looking at the card and making sure that you have all the information before you sign on the dotted line.
Start small — if you are just starting to get going with credit use a small amount and create a history of paying on it before you go to something bigger. This will help you establish your credit towards more credit. You might start with asking your bank for a small line of credit.
Remember the credit card is a tool not a life saver — many people use their credit cards for getting out of tight spots financially but they are really for buying things you need. If you restrict them to this use you can responsibly pay the payments each month.
Pay more than the minimum payments — if you want your balance to go down you will need to double the minimum payment. All payments go the interest on the card first and then go to the principle. By paying double or just a little more each month you will start to see your principle go down.
Credit Card Don’ts
Don’t succumb to the pressure — there are so many offers and when you look around many people have credit cards. When you get calls you can always say “no” and you can also get your name put on the “do not call list” for solicitations. You can call 1-888-567-8688 to opt out of these prescreening.
Don’t use your credit card instead of cash — unless you have a credit card that gives you rebates for purchasing everyday things, don’t use your credit card for daily purchases. This can lead to debt if you are not careful.
Don’t open up lots of lines of credit immediately — when credit card companies check your credit this can adversely affect your credit score. When new companies look at your credit report and see all of these lines of credit your debt to payment ratio can go down.
Don’t ignore that you are in trouble with your credit — If you find yourself using cash advances a lot to pay your living expenses, making late payments, or only paying the minimum balance, this can be a sign that you need to talk to a professional about how to manage your debt. If so, do it now before it gets to be a problem.