7 Rules to Avoid Falling into the Credit Card Traps
I can’t imagine living without the convenience of credit cards. Yet many get into financial trouble in part due to their misuse of credit cards. These are the 7 rules you need to take some deep considerations to avoid the missteps and use credit cards to improve you personal finances, instead of falling into the credit card traps.
1. Don’t Use Your Credit Card for Loans.
Pay off your balance each month. Pretty obvious advice but way way too many people don’t follow it. If you use your credit card for a loans - 98% of the time that is a mistake and big risk to your personal financial future. Don’t do it. There is a reason pretty much all the advice from financial advisers on credit cards starts with this - it is the most important advice.
2. Pay Off Your Loan ASAP.
This second rule applied, if you don’t follow the first rule above. Pay off your loan as soon as possible. Payment the minimum payment is huge mistake. You should not be making any discretionary purchases if you are not paying down your credit card debt substantially each month.
3. Pay Your Bill in Full
Pay your credit card bill in full each month on time. The huge fees credit card companies charge if you are late should be avoided. I will admit I have slipped up occasionally but take great care to avoid paying you hard earned money in exorbitant fees.
4. One Card for All
If you ‘re following the 3rd rule above, get a card that pays you for all your purchases. Straight cash is simplest and usually best but if you really want to take the time and effort to try and get more advantage through the use of airline miles or some such other gimmick go ahead.
5. Ask for Reduced Fees and Interest Rates
It’s the 5th rule, asking for reduced fees and interest rates - which you shouldn’t have to worry about since you shouldn’t use the credit card for loans but if you do - The credit card companies make a great deal off the use of credit cards and the cost of acquiring new customers is high so they are most often willing to negotiate. If you miss a payment or make the payment late - by mistake, once or very occasionally - ask for a reduction in the fee. The fees are far too high and just by calling you can likely get a reduction in the fee.
6. Setup an Automatic Withdrawal
Setup an automatic withdrawal of your monthly payment - the full payment - from your checking account. Of course you need to be sure you have the funds to cover these payments in full or you may incur fees not only for your credit card but from your bank. Many banks and credit unions will allow you to pre-arrange to have checks or deductions covered by the bank in the event you don’t have the funds in your account though their may be a fee if they cover a payment for you.
7. Get Paid for the Privilege
If you follow the rules above, credit cards are a useful tool. You get to buy items and don’t have to pay for them for a month or so - while you can be earning money on you money in a savings account or money market account. And since you are getting paid for a portion of your purchases you not only get a free loan for a month but get paid for the privilege.
Learn more about low interest credit cards and how to find the best deals when you apply for a credit card online here at this cool place, ExtraCreditCard.com. Extra Credit Card provides reviews of business credit card offers, student credit cards, bad credit credit card, and secured cards. Read their current news and credit card guide to stay informed.
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The list of credit card traps doesn’t just stop here either. I found a few other great resources on the various traps of credit cards here: