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Using your credit card correctly

Paying with credit is convenient, but if you don’t use your credit cards wisely you can end up in some serious financial troubles. Learn some tips on how to properly use your credit card so you can take advantage of the convenience without ending up in mounds of debt.
• Choose your cards wisely. If you already have credit cards, use the one card with the lowest interest rate to make purchases. If you’re in search of a new credit card, shop around until you find one with a low interest rate. Keep in mind that some cards offer a lower introductory rate, but after that period is up your interest rate will skyrocket. Also, choose a card that does not have an annual fee.
• Charge only what you can pay off each month. This is necessary in avoiding paying interest. If you charge $200 on the card, make sure you’ll have that $200 to pay the balance at the time payment is due. If you can’t do this, you really shouldn’t be charging anything at all. But if you do charge anyway, don’t go crazy with your spending. That $50 purchase will end up costing you an awful lot more by the time you pay interest.
• Stick to one or two cards. The more credit cards you actively use, the more likely you’ll be to get into financial trouble. When actively using credit cards, use the one with the lowest interest rate to make purchases and payments. You’ll be able to pay the card off quicker and you’ll actually be paying down the principle balance rather than just the interest.
• Pay more than the minimum payment each month. If you can’t afford to pay off the entire balance each month, at least pay more than the minimum. Typically, the minimum payment only covers the interest so if you’re only paying that, you’re not working at all toward paying off the actual balance on the card. If you can’t afford to pay more toward the card, you must at least pay the minimum to avoid late fees and negative reporting to the credit bureaus.
Using credit cards is a responsibility that must be taken seriously in order to maintain your finances. Irresponsible spending can leave you in a financial bind that can take many years to get out of.



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