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Are You A Smart Credit Card User? Here’s A Handy Checklist

Some of the most common credit card advice many people hear entails cutting up the cards and only using cash for items they can afford. While it comes with good intentions, this advice is not practical for the majority of cardholders. Financial experts agree that most individuals are unlikely to part with their credit cards. In many cases, using a credit card responsibly is often preferable to eliminating it. Being a smart credit card user is essential for building a solid credit rating. The following guidelines will help credit card users develop the best possible spending habits.
 
Stay Well Below the Credit Limit
An existing credit card balance is easier to handle if it comprises only a small percentage of the total available credit. Running up a high balance or even maxing out a card comes with much bigger monthly minimum payments. Some cardholders can find themselves in financial trouble if they are unable to make these higher payments by the due date.
 
Consider Each Purchase Carefully
Before charging any purchase, savvy cardholders give some thought to the decision. They consider if they truly need the item right away or if they can purchase it later. Buying it later when they have the cash available is a good strategy for avoiding more credit card charges and a higher resulting balance.
 
Ask for a Better Interest Rate
Many cardholders can feel intimidated about calling their bank or credit card company and asking for a better interest rate. Doing so can save them significant amounts over time. Many card companies are more receptive to these requests than card users may think.
 
Avoid Revolving Balances if Possible
In addition to keeping balances small, smart card users try to pay off the entire amount each month. This practice may not always be possible due to unexpected expenses, but paying off a revolving balance is normally a top priority for smart credit card holders. It allows them to avoid interest charges if they submit extra payments soon after the closure of the last billing cycle.
 
Pay More than the Minimums
Credit counselors often recommend that their clients avoid making only the monthly minimum payments. Doing so can extend the length of time it will take to pay off the entire balance. Paying even $15 over the minimum can make a big difference in the interest to be paid over time.
 
Examine Each Monthly Statement
Vendors can make mistakes when a customer pays with a credit card. Sometimes a cashier can enter the wrong dollar amount into a credit card machine or input the charge twice by accident. Smart credit card users look carefully at each charge on their monthly statements. When they do spot a mistake, they are able to call the credit card company’s billing department and have it corrected.
 
Smart credit card holders are those who set limits on their charging habits. They also approach credit card use as only one financial tool available to them, and using this tool responsibly involves making specific decisions. Each point on this checklist can make a big difference in a cardholder’s financial health.
 
Find more of Jessica Bosari’s personal finance tips at SavingTools.com.


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