Credit card companies devise a number of ways to make money off of their card holders
, here are just a few examples:
1. They offer you an introductory interest rate of 6-10% and then spike the interest rate to over 20% with barely any notice.
2. While you are being charged 15%+ interest on every purchase you make monthly, you will likely still have to pay various fees. Inactivity fees and yearly fees are common.
I could go on and on but you get the picture. Thankfully it is very possible to make that piece of plastic worth its wait in gold. Here is how:
1. Pay off your monthly balance during your grace period. This should completely exclude you from paying interest whatsoever. Meaning you get money interest free!
2. While following the advice listed in step #1, spend less than 30% of your maximum credit line monthly. Meaning, if your credit card allows you to keep a $5,000 balance, keep your balance less than $1,500. This will do wonders for your credit score. If your credit score is currently under 700 responsible credit card use is a great way to raise it. It is difficult to qualify for a mortgage or auto loan without an above average credit score.
3. Be sure to hold just one credit card. If you hold multiple cards you are opening yourself up to more trickery. Holding 5 cards instead of one gives you five more chances to make bad decisions and makeshavinginactivity fees five times more likely.
You can get the best of credit card companies, you just have to know what you are doing!