How to Take Charge of Your Credit Cards

Each year, millions of consumers incur credit card debt amounting to $5,000 and above. Some of them submit only the minimum due payment each month which means they also incur the additional interest rate, not to mention late fees, if they fail to pay by their due date.

True, having credit card is an advantage. However, being a credit cardholder also means taking responsibility. Listed below are smart strategies on how to use a credit card to your benefit and stay out of bad debt:

On Using Your Credit Card

One general rule is don’t charge a bill or purchase to your credit if you can’t pay it back in full by your due date. Now only does paying your complete balance enable you to save money by avoiding the interest rate and late penalty fees, it also minimizes the risk of bad debt.

However, many consumers are tempted to charge large purchases to their credit cards thinking that they can always stick to the minimum due payment and carry the remaining balance for the next few months. But such a habit can be risky, especially if you continue to incur new charges each month.

Yes, using a credit card requires strategy and self-discipline. Before using your credit card for any purchase, seriously consider your obligations.

On Using Your Credit Line

Another crucial aspect of managing a credit card is credit utilization. 30% of your total FICO rating is based upon your credit-to-debt ratio. Obviously, it’s not just about being prompt in submitting your payments. It is also important to stick within your credit line.

In fact, financial advisors recommend not using more than 30% to 40% of your available credit. Thus, to get a high credit score, you need to keep your monthly balances minimal.

Do you own a reward credit card? IF you do, then you need to especially cautious about how you use your credit line. Yes, you do earn points as you charge more purchases to your credit card, but don’t forget to check if your credit is being stretched to its limit.

Check your credit report at least twice a month to monitor your rating. If you have a good credit score, you can call up your issuer to request for a higher credit line. However, when your credit line does increase, be sure to keep your spending in control as a higher limit may encourage overspending.


About the Author:

Suzy Vanstrusen is a credit analyst and a writer on the website She has been providing consumers with tips and wise information about credit repair as well as helping you out more with your bad credit loans.  Copyright © 2010

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