There are a multitude of enticements when it comes to choosing and using a credit card. Companies advertise rewards points, cashback on purchases, and airline miles, to name a few. Having a credit card can also have drawbacks if you are not responsible with that piece of plastic. Keep yourself in check with these tips: 

  • Add extra to your minimum payment each month if you cannot pay the entire balance off each time. Compounding interest will increase the remaining balance as well having a negative impact on your credit. 
     

  • Make payments by the due date, because late fees plus interest on the balance will max the credit card limit, and it could take decades to pay it off. Set up an auto-pay plan or mail your payment one week before the due date. 
     

  • Rewards seem like a great reward, but in the end, interest costs add up to more than any rewards points earned. 
     

  • Interest on a cash advance begins as soon as the money is in your hand. Cash advances are loans and treated as such. Beware of “convenience” checks your card company offers, as they are cash advances in disguise. 
     

  • Protect your credit rating and your wallet by staying within your credit card spending limit. Maxing out the card or over-spending just a little will cost a hefty over-balance fee, as well as affect the credit utilization ratio. 
     

  • Keep your contact information current with the company, and check all correspondence from them, whether it be via snail mail or electronic communication. You do not want to miss important announcements, fraudulent activity alerts, or changes in your minimum payment due.  
     

  • If you are paying for everyday purchases with a credit card, it is time to get your finances under control. Using your credit card at the grocery store or to pay utility bills will help in an urgent situation, but only if you can pay the full balance at the end of the month.  

 

Two more things to keep in mind when using a credit card: the balance should be less than 30% of the credit limit, and monthly payments should be manageable for you. Credit cards should not be utilized as an extension of your income, but as tools to help build credit or keep your score in good standing.  

 

Courtesy of New Castle County DE Realtors Tucker Robbins and Carol Arnott Robbins. 

 

Photo credit: Calcite Credit Union