Credit and your credit card
Poorly managed credit cards are one of the main reasons people end up with overwhelming debt. For people trying to live off their card, they will usually end up in debt so bad that it affects other financial areas of their lives, like paying their monthly living expenses and paying their mortgage or rent. Credit cards should be used wisely because once you’re in debt over your head, it can follow you for years. For example, card debt can ruin your credit rating. When you maintain good credit on your card, institutions such as mortgage lenders look favorably on you when evaluating a loan application, as it demonstrates that you are financially responsible. Here are some tips to maintain good credit on your credit card:
Pay on time: Paying your card late can increase your interest charges and you’ll also rack up late fees and other penalties. If you fall far behind on your payment, the credit card company may even send a report to the credit bureau that will negatively affect your credit score. Missing a payment has both immediate and long-term consequences. To maintain a good credit history, it is essential that you pay your card bill on time each month. Remember, a significant part of your credit score is based on how well you pay your bills on time.
Pay more than the minimum payment: If you only pay the minimum monthly amount, you are just extending your debt and will pay more in interest charges. You’ll find that over time you’ll pay double or triple the amount you actually used. It’s important to pay more than the minimum amount so you can pay off your card faster and avoid additional fees.
Leave the card at home: People often use credit cards for convenience and for the rewards program. If you carry your card with you at all times, you’ll be more likely to use it, and at the end of the month, you’ll end up with a huge bill. Regarding the rewards program, you should consider whether the interest charges are worth it to get the reward points. A free trip won’t be as much fun if you’ve racked up a lot of debt to get the trip.
Two Cards Is Enough – If you have multiple cards and you’re maxing out one and then moving on to another, it can really add up and over time you’ll be in so much debt that you can’t pay it off. Also, multiple cards with multiple interest charges can put you in financial trouble. Maxing out your card can even hurt your credit score. It shows you can’t manage your credit, which will make it more difficult to get a car loan or home mortgage. Also, transferring an amount from one card to another is not a good idea because in most cases people will normally end up using up all the cards. Also, after a few transfers, your credit score will take a hit.
There are times in our lives when we need to use our card. Additionally, credit cards can have a positive impact on our credit report when used responsibly. If you have a credit balance on your card for a few months, you should not worry as long as you can settle it in a timely manner and your payments are made on time. When used responsibly, cards can be an asset.