Financial Times

Make Wise Credit Card Decisions With These Tips

Even if there is no cash in your wallet, you can still spend money that you might not have even earned yet. Credit cards have added power to your wallet, but also peril. Using your cards wisely can mean the difference between pulling your hair out because of the monthly bill or flying away to exotic destinations. Read on for sound strategies that will help you to use your cards wisely.

When you are unable to pay off one of your credit cards, then the best policy is to contact the credit card company. Letting it just go to collections is bad for your credit score. You will find that most companies will let you pay it off in smaller amounts, as long as you don’t keep avoiding them.

If an item truly costs more than you have to spend, don’t use a credit card to buy it. It’s fine to use credit cards to stretch out the payments for an item you can afford, but refrain from making a major purchase that you couldn’t afford otherwise.

Try your best to stay within 30 percent of the credit limit that is set on your card. Part of your credit score is made up of assessing the amount of debt that you have. By staying far under your limit, you will help your rating and make sure it does not start to dip.

Always make sure there is not a yearly fee attached to any credit card that offers rewards or perks. Annual fees for premium credit cards can range in the hundred’s or thousand’s of dollars, depending on the card. If you do not need a premium card, don’t get one.

Make sure that you pore over your credit card statement each and every month, to make sure that every single charge on your bill has been authorized by you. Many people fail to do this and it is much harder to fight fraudulent charges after a lot of time has passed.

Watch your credit balance cautiously. Be sure that you’re aware of what kind of limits are on your credit card account. If you pass that limit, you will end up paying more in fees than you know. You will take far longer to repay balances if you continually go over the stated limit.

Take the time to play around with numbers. Before you go out and put a pair of fifty dollar shoes on your credit card, sit with a calculator and figure out the interest costs. It may make you second-think the idea of buying those shoes that you think you need.

There are many cards that offer rewards just for getting a credit card with them. While this should not solely make your decision for you, do pay attention to these types of offers. I’m sure you would much rather have a card that gives you cash back than a card that doesn’t if all other terms are close to being the same.

Credit cards let you spend someone else’s money, on the condition that you are paying them back starting in a few weeks. The interest rates can ruin your future, or the reward points can brighten your coming months. To fall on the side of that divide that you want, apply what you have learned in this article.