subject: Five Tips To Keep From Trashing Your Credit With Your Credit Card [print this page] Bless those credit cardsBless those credit cards. They come to our aid in our time of need. A pox on those credit cards. All they do is try to fleece us. Does this sound like ambivalence? It is, and the truth is, credit cards are just little pieces of plastic. They are neither good nor bad. The person using the card is the catalyst for good or evil when it comes to whether their credit is gold or lead. Unheeded usage of credit cards is about the fastest way anyone can trash their credit.
Think about it. It's not the little piece of plastic that is driving you into bottomless debt, it's you. Any financial pro will also tell you that if you handle your credit card carefully, they are a fine means to building credit and a strong financial future. So, the question is not whether to have or have not a credit card, it is how to manage it so that it helps your credit rather than becoming its ruination. Here are five simple tips from top financial advisors on the care and management of your little plastic card.
1) Don't say yes to the first credit card that comes your way. The number one mistake people make when choosing a credit card is selecting the first one to land in their mailbox. Low interest, low/no fee cards are not marketed as vigorously as those with a higher APR. You're going to be the one paying the difference.
2) Don't pile up the number of credit cards you own. It is enough to track one card, let alone spending that time on two, three or more. Stick with just one all purpose credit card and leave the rest alone.
3) Opt-out of interest rate increases. Everyone complains when their credit card company decides to increase the interest rate on their card. What they don't realize is that they have a choice. In this case, when your credit card company's trying to raise your interest rate past what you're comfortable with, you can opt-out. You won't be able to charge anything more to that card, but you'll still have up to 5 years to pay off your current balance. (Check this policy with your credit card company before signing on the dotted line.)
4) Use your debit card for purchases instead. Debit cards are issued through the same companies that issue your credit cards, making them just as flexible and convenient for use, but they draw directly from your checking account rather than running up your debt. I know nobody carries cash anymore, but using a debit card for smaller purchases and non-emergencies will go a long way toward keeping you from running up an unnecessary credit card bill.
And finally
5) Tell your creditor if you can't make the monthly payment. Creditors, contrary to popular belief, are not ogres. If you find yourself in a long run of hard luck which devastates your income, pick up the phone and talk to someone at your credit card company. They don't want to be stuck with law suits or unpaid bills any more than you do. They will work out a payment plan with you that you can follow without busting your credit rating. You may have to go up the supervisory ladder at the company to finally find the one with authority that understands and can help you with this. It's up to you to follow the plan laid out to you religiously. They did their part; you do yours.
Responsible credit card ownership makes all the difference between a credit card that helps your credit and one that's going to kill it. Handle your credit cards with care.
