Keep Credit Cards From Ruining Your Financial Life

Many people think all credit cards are the same, but this is not true. Credit cards can have different limits, rewards, and even interest rates. Selecting the right credit card takes a lot of thought. Here are some tips that will help you select the right credit card.

Take advantage of the fact that you can get a free credit report yearly from three separate agencies. Make sure to get all three of them, so that you can be sure there is nothing going on with your credit cards that you may have missed. There may be something reflected on one that was not on the others.

You should try to pay your credit card balance off monthly. In general, its best to use credit cards as a pass-through, and pay them before the next billing cycle starts, instead of as a high-interest loan. Your credit score benefits from the credit card use, and you wont have finance charges if paid in full.

Always know what your utilization ratio is on your credit cards. This is the amount of debt that is on the card versus your credit limit. For instance, if the limit on your card is $500 and you have a balance of $250, you are using 50% of your limit. It is recommended to keep your utilization ratio of around 30%, in order to keep your credit rating good.

Keep an eye on your credit report and score. A score of 700 is what credit companies feel the limit should be when they consider it a good credit score. Use the credit you have in a smart way so that you can stay at this level. If youre not there yet, you can use it to get there. At a score of 700 or higher, youll receive the best credit offers with the lowest rates.

You need to pay more than the minimum payment each month. If you arent paying more than the minimum payment you will never be able to pay down your credit card debt. If you have an emergency, then you could end up using all your available credit. So, each month try to send in a little extra money in order to pay down the debt.

Students who have credit cards, should be particularly careful of what they use it for. Most students do not have a large monthly income, so it is important to spend their money carefully. Charge something on a credit card if, you are totally sure you will be able to pay your bill at the end of the month.

Only spend what you could afford to pay for in cash. The benefit of using a card rather than cash, or a debit card, is that it establishes credit, which you will need to get a loan in the future. By only spending what you can afford to pay for in cash, you will never get into debt that you cant get out of.

Exercise

It is an excellent idea to open one credit card account that you do not use. Tuck this credit card away for emergency expenses. Exercise discipline in this matter. Your emergency credit card should only be used in real "last resort" situations. If you ever have to use it, pay it off as quickly as possible after the emergency has passed.

Now that you realize that all credit cards arent created equal, you can give some proper thought to the type of credit card you might want. Since cards differ in interest rates, rewards, and limits, it can be tough to choose one. Luckily, the tips youve received can help you make that choice.