Wednesday, July 25, 2007

How to Use Credit Cards

Here are some basic tips for using/getting a credit card:

1. Find the lowest interest rate possible.

2. If you are financially able, pay your balance in full each and every month. If you are riding out a 0% introductory rate, ensure you can pay the full balance at the end of the introductory period.

3. If you are unable to pay your full balance each month, pay as much as possible and always tackle the cards with the highest rates first.

4. Try to find a credit card that offers "cash back" or some other incentive. I have a Chase Freedom Card that has literally EARNED me thousands of dollars over the years.

5. Try to find a card with no fees at all. For some people who've had credit challenges in the past, this may be difficult and you may have to get a card that has fees just so you can start establishing good credit. Ironically enough, bad credit is better than no credit. I used to work at a car dealer and it was easier for customers with bad credit to get a loan than customers with no credit history.

6. Pay your bill online each month if possible. Save the money that you would spend each month on stamps and put it towards your bill.

7. Don't overspend. This will help you meet #2. Sometimes you just need to make a budget so that you know how much you can afford to spend each month on your credit card.

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