5 Safety Tips For Credit Card Users

Everyone knows that a credit card can be a tool for good, but it is much easier for a credit card to turn thing bad.  Used as prescribed, a credit card can build up positive credit for the card holder.  Some credit cards offer rewards for regular purchases and payments.

The key is to never allow spending to get out of control.  Credit card interest rates are never very low in comparison, and balances can inflate quickly if left unattended.  There are a few key tips to follow when working with a credit card that will help keep balances under control.  Here is a brief overview of a few safety tips for navigating the world of credit cards.

Understand the parameters of the card

Every line of credit comes equipped with a whole lot of fine print.  Read every single line, and do not look over terms that are unfamiliar.  Find out what everything means before signing anything.

Below are a few key terms used in almost every credit card application.

  • Annual Fee – A yearly fee that card holders pay for the use of the card.
  • Annual Percentage Rate (APR) – APRs are variable, so make sure to understand what each card has to offer.
  • Balance Transfer Fee – The charges accrued for transferring credit balances.
  • Cash Advance Fee – The charges accrued for taking out a cash loan on the line of credit.

Use credit for needs, not wants

Too often, cardholders use their credit cards for frivolous purchases and quickly find themselves in financial despair.  Credit card purchases should never be more than what can be paid within the next month, unless the charges are for emergency purposes.

It is most helpful to keep a minimum balance on any type of credit card.  Interest rates will not have the chance to accrue when there is no carry over balance from the month before the current billing cycle.

Stay under 30 percent of the max balance

It is advised that card holders limit their spending to a maximum of 30 percent of the total line of credit on the card.  Keeping a balance below this standard will avoid the card’s balance affecting credit ratings.  When the balance is above 30 percent, it may reflect negatively on an individual’s credit report.  For example, if the credit limit on the card is $1,000, charges should stay under $300 each month.

Pay more than the minimum payment

Paying the minimum payment each month allows interest to accrue on the credit card balance.  To maintain a positive effect on a person’s financial standing, it is good to pay off balances as quickly as possible.

Avoid carrying several credit cards

Carrying too many credit cards at once can actually hurt a person’s credit rating.  When lending agencies see that an applicant already has several thousand dollars tied up in credit, they feel as though adding more may cause an issue.

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