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Owning
a
credit card
is something that can be a very positive thing… as
long as it is used responsibly There are many
ways for people to use
credit cards
to their advantage, but there are also ways for
credit cards to get people into financial trouble.
By following a few simple tips related to managing
credit card usage, a credit card can be a very
beneficial piece of plastic to own.
Establishing Credit
For anyone who has never before owned any sort of
credit card and has never been loaned money, there
will probably be very little information (neither
good nor bad) on their
credit report.
Without a
credit history,
it's difficult for credit card companies to
determine whether or not to offer a
line of credit
to a person. In this situation, the credit card
companies tend to err on the side of caution and
not offer a card.
However, if there is one credit card company out
there willing to offer a credit card with a very
small line of credit to someone with no credit
history, that card should be immediately obtained.
It should be used very wisely to purchase a few
low-priced items, and the monthly payments for
that credit card should be made on time every
month.
As
time goes on, this sort of spending and monthly
payment behavior will allow a credit report to
grow with nothing but good marks. A person's
credit score
can continue to grow higher and higher when they
can show the ability to handle and pay for their
credit card purchases.
Over time, a person's positive credit report will
allow him or her to obtain either additional
credit cards or credit cards which offer great
interest rates
and other types of benefits.
Don't Charge Too Much
Just because a credit card has been obtained does
not mean it should be over used or abused. If a
new credit card has a
credit limit
of about $1,500, it's smart to keep the balance on
that card significantly lower than the maximum
allowed to be charged. So, charging no more than
$1,000 - at the most - is reasonable.
A
credit card company issues a credit limit based on
how much they believe a person can afford. And,
higher balances means a significant amount of
interest must be paid on the balance, which can
create an amount due that is unaffordable.
If
the credit card is used to charge more than the
available credit limit, the credit card company
will issue an over-charge fee and the user will
not be able to use the card again until some of
the balance has been paid.
Don’t Pay Payments Late
When it's time to make a
minimum payment
on a credit card balance, PAY IT! Payments should
NEVER be late. Late payments can negatively affect
a person's credit report, and in turn, lower a
person's credit score. Making payments on time,
conversely, can help a person build a good credit
history and earn a better credit score.
Knowing that a credit card bill will be received
in the mail on approximately the same date each
month, prepare ahead of time and make sure there
is enough money in the bank to send AT LEAST the
minimum amount due.
Keep Credit Cards Safe
In today's world of being able to easily purchase
items via telephone or the internet, it's
important to keep credit cards and credit card
numbers in a safe spot. If anyone non-trustworthy
person were to get their hands on another person's
credit card, charges could be made to that card
which were not authorized by the card owner. While
most credit card companies do not hold card
holders responsible for unauthorized charges, it
does not look good if this sort of situation
happens more than once (at the most!) during a
person's lifetime.
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