Sep 11, 2009

Using Credit Cards Effectively

Use our easy credit card to shop without the need to carry cash, and on the other hand we also consider the security aspects such as never to inform the data available on our credit cards to others, including close relatives, whether the card number, expiration, name printed on the card, and so forth.

Using your credit cards wisely might be the most important and beneficial decision you can make towards financial health. The reason for this is simple: high interest rates on credit cards can cost you more than money if you find yourself unable to make your payments on time.

Consider this: For most consumers, home payments (or rent payments), along with automobile payments are usually the two most expensive debts that a consumer carries. These two payments alone can often account for over 30% of a consumer's take home pay per month. When high-interest rate credit cards are added to this, the overall cost per month can easily reach 60% or more of take home pay. That does not leave much for other expenses such as food, clothing, car insurance, personal loans, etc. For many consumers, the payments on their credit cards are the most expensive debt that they carry.

Consumers often forget that if they do not pay off the entire balance owed within the grace period allowed they will be charged interest. Some companies will be fair about this charge, but most will happily charge as much as they can for the credit they are extending to you.

To make matters worse, if you are late on your payments, or if you do not make any payments at all, this can be reflected in your credit score. I does not take very long at all for deliquent payments or non-payments to hit your credit report and once they are on your report they stay there for up to seven years.

These marks against your credit will often cause lenders to either deny you future loans or cause them to levy higher interest rates on accounts that you may wish to open. All in all, late payments will cost you money in the future. The very best way to handle credit cards is to pay off the balances as they occur. This not only makes you look good in your credit report but it also keeps you from having to pay those high interest rates for balances that are carried over.

The second thing to do is to avoid your credit cards unless you honestly need to do so. Instead need to do so. Instead of paying with your card, pay with cash. This one action can save you more money than you might imagine.

Yes, it is easier to pay with the card sometimes, but it is also more costly. If you feel you are already in trouble, sit down with your statements and make a plan to begin paying the down. Start with the credit cards that have the lowest balances. Once these are paid off, move to the next highest and begin paying these down. It will take patience and sacrifice, but it can be done and soon your credit cards will be under control.

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