subject: How to Manage Your Credit [print this page] How to Manage Your Credit How to Manage Your Credit
Learning how to manage your credit is very important. It is important because the way you manage your credit will determine whether you end up in credit card debt or be able to take full advantage of the financial benefits that credit cards bring.
When managing your credit, the very first thing you need to do is to understand that credit cards exist only as a financial tool to help you achieve your financial goals while providing convenience and great flexibility.
The second thing is to treat credit like cash. Like money, credit is definitely not unlimited and its use is something that you also need to earn. People often fall into the trap that since credit is readily available, they can use it anytime without thinking about its real cost to them. Think about it this way, you cannot spend cash unless you have already earned it and it's in your pocket. It's just the same way with credit. Sure it is already available even if you haven't earned it, but you should approach purchases using your credit like you are using cash. Think about where you will get the money to pay off the credit used up each time you use your credit card. If you have no idea where you'll get the money to pay for the balance on your credit card, then you should not give yourself the right to use your credit card. In short, factor your credit card purchases into your budget!
Another aspect of credit management is knowing more about your credit card. Compare cards to know the different APRs of each card. As a rule, you should use the credit card with the lowest APR. However, if the due dates for payments are different, use the credit card whose payment due date will fall a few days or weeks after you get your hands on the funds you plan on using to pay off your bill. Remember, late fees will cost you more than interest. If you won't be paying off the entire balance at once, stick to using the card with the lowest APR, but make sure that you at least have enough to pay the minimum amount required before the due date.
By simply factoring your credit card purchases into your budget and knowing which card to use, you will surely be able to keep the balance on your credit cards at a reasonable amount so that you can always pay them off by the due date, or at least pay more than the minimum amount required. Remember, manage your credit to stay our of credit card debt.
