Dos And Donts On Using Credit Cards

Credit card debt is a real dilemma in our society these days

. Statistics show that the average American carries an outstanding balance of $8,000. In another survey conducted by the Census Bureau, the number of cardholders is expected to reach 181 million by 2010.

If you own a credit card, check out the following tips on how you can benefit more from your credit card and how you can avoid bad debt:

The DO's:

Do pay on time. This is considered as a golden rule in using credit cards. Paying on time can definitely save you from penalty fees, minimize the risk of debt build up and protect your credit score from falling.

DO charge only what you can pay. Before charging a bill to your credit card, make sure that you will be able to pay it by your due date. If you have any doubts, it's best to skip the purchase.

DO pay your full balance. Some cardholders choose to submit only the minimum amount due each month, leaving them with a significant outstanding balance in their accounts. Such a habit can put you in danger of bad credit.

DO check your monthly bill. Always make it a habit to carefully review your monthly billing statements to make sure that there are no errors or unauthorized charges made in your account. Once you find any error, report it immediately to credit card provider on the same day to clarify the issue. If you do not receive your bill on time, notify your Issuer as someone may have called them and asked for a change of billing address without your knowledge.

The Don'ts:

Don't maximize your limit. Ideally, you should keep your credit card balances less than 50% of your borrowing limit. Keeping your charges minimal not only reduces the possibility of accumulating debts, it helps to raise your score by as much as 10% higher. You will also make a good impression to potential creditors, insurers, or employers who may check your report.

Don't bring all your cards with you. If you own more than one card, never bring them with you especially when you are on trips. If you do, you will be most likely tempted to use them on your purchases. Furthermore, in case your wallet gets misplaced or stolen, it will be easier for you to call up just one credit card company to protect your account.

Don't close old cards. Do not terminate your oldest credit card accounts, just because you do not use them as much or because the interest rates are high. Doing so may hurt your credit score, as you would be erasing the oldest parts of your credit history. Keep them active by using them for small purchases and pay it off the same day you made the purchase.

Don't transfer huge balances into one card. If you want to use a zero interest balance transfer card to help you with your payments, make sure that you are not using up more than 50% of your credit limit, as it can pull down your score.

Copyright (c) 2010 Tara Tiemann

by: Tara Tiemann

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