So you’ve received a sparkling credit card with a sky-high limit. Not so fast! Before embarking on a huge shopping spree there are a few important things you should know in order to avoid a credit crisis in the future.
Is your new credit card for “emergency use only”? If that’s the goal, it’s necessary for you to define what type of situation will be considered an “emergency.” Perhaps it’s a leaking pipe flooding the basement. Or it could be the Annual Shoe Blowout at the Super Shoe Warehouse. No matter what, you should decide on the card’s purpose and commit to it.
Perhaps you’ve obtained this new card in an effort to improve your credit rating. This is an excellent idea if you’re young and hoping to make a major purchase in the future such as a home. If credit improvement is your goal, be sure to use your card in a manner that helps your credit instead of hurting it.
Paying your entire balance on time each month is an excellent way to maintain a strong credit rating. This will demonstrate that you are financial responsible. It will also help you avoid those high interest fees. To avoid accumulating debt, write a budget and stay committed to it. Only spend what you can afford to pay off, without having to rely on your savings to do so.
Some individuals feel compelled to check their credit report and score on a monthly, weekly, or even daily basis. While it is a good idea to keep track of your report and score in case of any fraudulent activity, make sure you do it responsibly. Using one of the three major credit bureaus is the best option. Checking through a credit lender repeatedly can actually HURT your score. Avoid doing that unless you’re actually applying for credit.
A common mistake is to rely on credit cards, rather than savings, to make ends meet on a routine basis. This will take you down the path to heavy, long-term debt. The purpose of maintaining a savings account is to have something secure for the future, or safety net if you’re going through a rough patch.
Credit cards come in handy for shopping no matter where you are. The internet has generated a global shopping market. It’s easier than ever to find whatever you want and have it sent directly to your home. When using your card for online shopping, make sure that the site you’re using is safe and secure. Being careful will help you avoid fraud, scams, and identity theft. These situations can irreparably damage your credit.
Now that you’re familiar with the basics of smart credit card use, maintaining a healthy credit score and staying debt-free will be a cinch. You’re ready to go out there and begin charging!
Entries (RSS)