Credit card companies are more than happy to provide their credit cards to more and more people every year. However, unfortunately they do not provide the guidelines behind the prudent and responsible usage of a credit card to their consumers as well. In fact, the practices that would be deemed as responsible and sensible as far as credit card usage is concerned at the same practices that will prove to be least profitable to the credit card companies. Listed below are so common tools and don’ts of credit card usage.
Don’t Use a Credit Card to Make General Monthly Purchases
Do not get into the habit of making small monthly purchases on your credit card. Very soon you may find yourself buying things that you do not really require and getting into debt.
Don’t Get into the Habit of Making Minimum Monthly Payments on Your Credit Card Bill
Always try and pay more than a monthly minimum on your credit card bill. As long as you keep making only the minimum monthly payments it is possible that the entire amount goes towards interest and financial charges without reducing the principal amount in any way. This means that you will not only have to pay a large sum of money is interest to the credit card company but may also not come any close to removing the debt from your record for years to come.
Differentiate between the Items That You Want and Items That You Need
Several times we define the items that we need is the items that we want really badly. Don’t use spend now and pay later capability of a credit card to buy items that you really do not need nor can afford. It is quite likely that what you cannot afford this month will be just as unaffordable the next month and month after that. Wait for the right time to make purchases that are expensive and could prove to levy a burden on your credit card payment every month.
Try and Not Miss a Payment on Your Credit Card Bill
Missing a single payment on a credit card bill may not be such a big deal. One off instance where you forgot to pay a bill won’t create havoc with the credit history or your credit score. A late payment is usually reported by the credited to the credit bureau after it has been late for more than 60 days. Once this information gets reported it stays on the credit report for a period of seven years and enhances the credit score negatively. If information of late payment finds its way on your credit report frequently or there are other such instances already existing on your credit report then this could severely impact your credit score. The payment history is the single most important factor that is considered by the credit score calculation model. If you anticipate that you are going to face problems in making the monthly credit card bill in the coming months you can try and contact your credit and see if you can work out something with him such as a loaded rate of monthly interest or waiver of financial charges.
Keep the Balance Low on Your Credit Cards
The second most important factor taken into consideration while calculating the credit score is the debt to balance utilization ratio. It is important to keep the balance down on your credit cards. Typically it is advised to have a balance that is at the per cent of the total credit limit available on your credit card. If you are running high balances or used to charging large amounts on your credit card every month then bring the balance down by making more frequent payment to the credit card company or requesting the credited to increase your credit limit.