Credit cards are one of the most helpful tools in your economic toolbox. They provide you with a way to manage your money and indebtedness. They are a small plastic card that will help you buy a car on credit, or to buy something from Best Buy on credit. The impeccable survival instincts of consumers are a function of using credit cards instead of carrying around all of the cash with them.
However, the ability to handle credit card debt can quickly turn into a deadly trap for the beholder if you don’t understand how it works and to keep yourself with low credit scores. If you are second guessing the use of my card or loan, it’s time to do it right. Here’s how you can make your credit cards help you enhance your credit score instead of alienating it.
- Do you have bad credit score?
If you can check yes on your credit rating and history, you are ahead of the game. If you can check “yes,” off, you are still ahead of the game. The perfect credit rating to have is a 720 or higher, with any lesser score being a financial death sentence for you. The difference of a couple hundred points may seem insignificant to you right now, but in time the difference actually adds up. It might not seem like a big deal to you right now, but in order to buy your dream home, you’ll almost double the price you pay for the house. By using a financial institution to help you with your credit, you can get the score you need to purchase your home in three weeks. So, the first step is to get to 720 before you worry about your credit score.
- What are you spending habits
The true offense for making your credit score lower is spending more money than you have to spend. A simple way to figure this spending amount is to save every receipt you get, and go over them a few times. You always want to have track of your spending trend, so you can check your progress regularly. The goal is to have a habit of spending less than you take in, and saving the difference.
- Have a savings plan
This seems like the perfect idea, after all, how can you spend less when you know you will be spending less, right? The problem is when it comes to building your credit, it’s easier for you to spend money that your own. The key to decreasing spending is to have you have money set aside in a savings account before you spend. This money must be your own, you don’t have to use your savings to make that money available to you.
- Pay down and pay off your credit cards
If you have overspent on your credit cards or loans, you will want to start paying down your debt fast. Credit card debt is the quickest to build, due to the fact that it stays with you longer. You will want to create a debt elimination plan so that you pay off debt where you are ensuring that you pay the least amount of interest possible.
- Your second credit card should be used for emergencies only
If you don’t have a savings account, you will be tempted to use your second credit card as a mode of emergency funds. This use could lead to that credit card to be maxed out, and then you will have to find money somewhere to make the payment. If you used your most of your credit card for emergency funds, you will have to work overtime at the job, or take a second job. This can be counterproductive when you are trying to boost employment prospects and improve credit, so find a plan for this purpose that works for you, not for the credit card company that will turn over your hard-earned money to them.
ller criter cetera: what you don’t know can hurt you
Credit card companies are in business to make money. To do this, they got a lot of scruples, including the ones that designed the cards. They don’t want you to know the most obvious things about them. Here are some of the things that a credit card company won’t tell you, even if you know them yourself:
*They charge excessive fees for your APR. An APR of 10% is not uncommon these days. If you are making just the minimum payment, the company willtm away $115 for your annual interest rate.
*Some cards have a universal default clause. This means that if you accidentally miss a payment to another creditor (not your credit card company), you could be charged a late fee and your APR will skyrocket. This is a common practice and one that can take a lot of money out of your pocket. Companies will set a default APR but will give you a grace period of 30 days before checking your payment status.