Everyone should have one credit card simply to build good credit and learn basic money-management skills. Knowing how to use a card is important because it will allow one to make an educated decision. This article gives some basic tips of what to do when you have a credit card. It will help you make wise choices and avoid credit trouble.
It is a good practice to have more then one credit card. This helps build up your credit, particularly if you pay your cards in full monthly. You should have no more than three open credit cards. If you have more than three credit cards, it may be more difficult to qualify for a loan.
Do not close credit card accounts until you understand the impact it may have. Sometimes, closing a card can have a negative impact on your credit scoring and this is something nobody wants. The card that makes up most of your financial history should not be closed.
Whenever you spot anything fraudulent on your monthly credit card statement, call the issuing company right away. This allows the credit card issuer the best opportunity to find the offender. By doing this you also are less likely to be held responsible for any transactions made from the thief. A simple phone call is usually all it takes to report fraudulent charges or put a hold on a stolen card.
Keep track of your purchases made by credit card to make sure that you do not spend more than you can afford. It can be easy to run up a huge debt without realizing it, unless you keep tabs on how much you're spending.
Lots of credit card companies give bonuses for when you sign up for new credit cards. Pay close attention to the fine print so that you actually qualify for the promised bonus. These terms commonly stipulate that must spend a given amount within a certain time-frame in order to qualify. If you don't think that you can meet the terms of the offer, it might not make sense to sign up for the card.
Outweigh the benefits of having a credit card against the costs of using it before making purchases. You could discover the interest rate, fees, and payment schedule are a lot more than you anticipated them to be. The fine print can be daunting, but a little effort can make a huge difference in your financial situation.
Always read every letter you get regarding your credit card. If a company has notified you that they will change a policy, they are within their rights to do so. If the terms are not ones that work for you, cancelling the card is an option.
The interest rate in the initial offer is not always the interest rate your card will have. Remember, the credit industry is competitive between companies, and each company has different rates available to them. If your interest rate is higher than you would like it to be, make a call and ask the bank to reduce it.
Do not close too many credit accounts at once. It may seem like the obvious thing to do to help your credit score, but closing accounts can actually be detrimental to your credit score. When you close an account, your available credit is decreased and the ratio between it and what is owed decreases.
Every year you should make sure to ask for a free credit report from each of the credit bureaus. Compare the credit card debt shown on your report to your statements to make sure the information matches.
Unless you know and trust the company with whom you are dealing, never reveal your credit card information online or over the phone. When receiving unsolicited requests for credit card numbers, be very cautious. There are a lot of scams that people try to use to collect credit card numbers. Be thorough and protect your card number.
Do not lie about the amount of money that you make in order to apply for a credit card that has a much higher limit. A lot of companies won't take a look at your income and they'll hand out cards with bigger limits. This might end up making you charge too much, so it will be impossible to pay it back.
If you have a credit card that you don't use, it's best to close the account. You are making yourself a likely victim of fraud if you choose to keep them open. Also, a lot of companies just love tacking on those annual fees for individuals who haven't closed their accounts.
Be watchful of your card transactions. Sign up to receive mobile alerts if they are offered by your provider. This way, irregular activity can be questioned immediately. Contact your bank if you learn of activity you didn't authorize. You may also need to contact police.
Do not use a credit card to pay for itself. Many people in financial trouble see this as a way to "buy time" to pay off the debt. However, you will pay very high interest rates and even some fees to take advantage of this trick, meaning it is not worth your while.
Designate just one card for your online purchases. When you use multiple cards on the Internet, you can be vulnerable. Limit exposure by designating one card for that purpose.
Always make payments on your credit cards bills each month by the due date. Credit card providers can charge large fees for late payments and can increase the interest rate on your credit card. As well, the missed or late payment will be reflected on your credit report, lowering your overall credit score. Think about using your bank's bill-pay app to auto-debit your credit card bill. This will help you make absolutely sure that you pay it on time.
Following the tips above, an individual can benefit while trying to build credit and manage their finances. Understanding the individual cards is essential though, as this helps individuals to make educated choices. Knowing what to expect from having a credit card will help you make better choices.
