In today’s world, everyone old enough to understand the concept of personal finance has at least one credit card. When it comes to getting a credit card, advice wouldn’t be necessary as applications show up in the mail or through the phone very frequently. It’s managing the card that needs to be taken care of as it takes a lot of dedication and responsibility.
Take a look at the recent mortgage crisis that affected almost everyone in America. If everyone knew how to actually control his impulsive buying on credit behavior, none of this financial crisis would have happened.
Use only one credit card
For many reasons, restricting yourself to only one credit card is a good first step towards freedom from huge credit. First, you can keep track of your debts in one statement. This may be a little too obvious, but a lot of people suffer from unrealized debt due to their overlooking of some credit card bills, thereby unintentionally neglecting to pay the bill on time.
To avoid this, it is best to stick to one card. More importantly, the one-card policy will eliminate any chances of you getting a low credit score. Keep in mind that the more credit cards you have, the lower your credit score gets. This can be troublesome in the event you need to take out a loan from a bank or any financial institution.
On www.carloanpoint.com, you will see how your credit score can affect your loan application.
Aim to pay off the full amount on your monthly balances
People are happy with the idea of having a credit card because they are given a chance to purchase something they want without having to pay for it right away. The concept of “Buy now, pay later” makes life a little easier.
However, huge financial problems may arise when the monthly balance is not paid in full. Interest is charged, which can compound quickly, making your principal surprisingly huge. If only the minimum payment is made every month, the principal could take years to pay off. This often traps the person in an endless cycle of debt as the interest keeps getting charged month after month. That said, avoid this completely.
Get a card with a small credit limit
Credit card companies often give their customers a larger credit limit than what they need so they will charge more purchases to the card. It may seem that the company is being generous, but such tactic is really for marketing purposes and not for you.
So by all means, avoid falling into this trap. Having a large credit limit is obviously tempting, but it is always better to practice self-control and dedication. As much as possible, use your card for emergencies and petty purchases only.…