How to Use Credit Cards Wisely

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By lymanalo
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Use Credit Cards Wisely

Credit cards are a must in our today's society and a financial convenience vital in our modern way of life. We all know, though, how purchases, charges and fees can easily get out of control. Below are some tips to help you use your credit card accounts wisely.

Difficulty: Moderately Easy

Instructions

Step 1

Always pay your credit card bill on time. This not only ensures good credit report rating but also prevents additional bank charges and late fees. Sign up for online billing to prevent the possibility of overlooking monthly payment obligations.
Step 2

To build a solid credit rating, send at least twice the minimum payment required. However, paying your credit card bill in full every month as they are incurred will save you thousands of dollars in interest charges. Look for credit cards with no annual fees and with longer grace periods, which is the time allowed to pay bill before interest is charged.
Step 3

Keep credit card charges at below 50% of maximum credit limit. This proves to creditors responsible debt management. Over-limit fees credit card companies charge are staggering and do add up at about $40 per incident. As a wise rule of thumb, total credit obligations at any time should be kept below 20% of your annual income.
Step 4

Shop around for cards with the lowest annual percentage rates (APR). Do not be lured by rewards or rebate programs as most of these are perks you don't really need and usually come with restrictive redemption policies. Transfer high-interest balances to the best balance-transfer rates and close other accounts.
Step 5

Review credit card statements as soon as they arrive. Question any discrepancies in charges or fees before you pay your bill. Monitor for any increase in interest rates. The credit card agreement you signed allows the bank to change the terms as long as they give you at least 15 days' notice of these changes. Most credit card companies are either in South Dakota or Delaware as neither of these two states have caps on rates.
Step 6

Call your credit card company to negotiate lower interest terms. This is where handling your credit card account wisely comes into play. Credit card companies will usually concede to adjust rates downward than lose a loyal and responsible customer like you to a competitor.
Step 7

Refrain from using credit cards for cash loans. Credit card advances are generally very expensive with not only higher interest rates but also additional fees of around 2 to 4% of the cash loan.