Following these simple rules of how to use your credit cards could save you from struggling with debt the rest of your life
It happens to many of us. You get a shiny new credit card and go out and buy that one thing you really really wanted. You have a credit card, so you can just pay for it later, right? You’re not at all thinking about credit card rules you need to follow. Rules that will keep your credit score up, and keep you out of debt.
When we become adults, we are thrown into a big financial world with almost no training. At 18, we become eligible for credit cards and get super excited at the idea of being able to buy whatever we want, and not paying for it until later.
No one tells how easy it is to fall into credit card debt, or how hard it is to crawl out from underneath it.
By the time you figure out how to use credit cards wisely, it’s usually too late. And then you spend the rest of your life trying to dig yourself out of a financial mess. If only you had known sooner!
Maybe you are about to begin your financial journey as an adult. Or maybe you are already navigating it and just can’t understand why it’s not working out. Either way, you need this list of credit card rules to follow.
Credit Card Rules You Need to Follow
Following these simple rules can help keep you from ruining your credit score, and keep you out of debt!
1 – Never Miss a payment
Sounds easy but this is where a lot of people mess up. You could be a perfect credit card user for years but one late payment and you’ll be sacked with fees. Those fees add up and the next thing you know, that one missed payment will take forever to pay off.
If your missed payment goes beyond 30 days, you could potentially be looking at a credit score drop of 100 points! Never missing a credit card payment is the number 1 rule of using credit cards wisely!
2 – always pay in full or more than the minimum
Credit cards can be a great thing if you use them wisely like paying them off at the end of every month. Then you’ll never pay fees or hurt your credit score. But even when paying the full amount is impossible, always try to pay as much over the minimum as you can.
Paying just the minimum on a credit card balance is meant to keep you in debt for YEARS and make you spend as much in interest as you did in charges. This is how the credit card companies make money, so they are going to do their best to keep that interest hitting you.
3 – avoid annual fees
I never sign up for a card with annual fees unless it benefits me more in the end. Which is rare. Those annual fees can be upward of $99. And if you are anything like me, you forget about them until BAM… it hits your account and you didn’t plan for it.
Credit card companies want you to use their services. You shouldn’t have to pay a fee to do so.
4 – don’t cancel credit cards
If you get your balance down to zero and you don’t want to use that card anymore, just cancel it, right? WRONG! Closing a credit card account can actually hurt your credit. So if you are done using it, just cut up the card and throw it away. But don’t ever close the account.
5 – limit new cards
It can be very enticing to sign up for hundreds of cards that all have perks or discounts for you. But having too many credit card accounts can also hurt your credit score. Not to mention it may be too tempting to use them all.
Every time you apply for a card, you can take a little ding to your credit score. Resist temptation and that sweet little sales lady who offers you 20% off today by getting a new card. A one time discount is not worth the lifetime of debt one of those cards can cause.
6 – know your credit limits
So you think if you just spend and spend and hit your limit, the credit card company will just stop you from shopping, right? Nope. Think again! They will charge you fees for going over your limit. Have you started to see a trend now of how credit card companies make money? They charge fees for everything!
But if you also want to keep your credit score in good standing, you need to keep your balance under 50% of your limit. So if your credit card limit is $2,000… then you always want to make sure your balance stays under $1,000.
7 – find no interest cards
These are pretty much the only credit cards I have. No interest means I only pay for what I buy. No more. Interest is what really keeps you in debt. A minor purchase of $100 can all of a sudden take months to pay off.
If you have debt on your credit card, find cards with 0% interest transfer fees. When that no interest period ends, transfer the balance to a different no interest card. Keep rotating your balances like this and they will be a lot easier… and quicker… to pay off.
8 – never take a cash advance
Cash advances are loaded with fees and high interest rates. If you really need cash that bad, find another way to get it! Taking a cash advance from your credit card is a sure way to keep you in debt for a long long time.
If you really need to do this, think twice about what you need that money for. Taking a cash advance on a credit card is often a sign you can’t afford it in the first place!
9 – get perks
The one and only reason I use credit cards are for the perks, If you really learn how to use credit cards wisely, you can walk away with some great rewards.
I use discover card because they give cash back. Every month, I pay off what I charge. So not only am I not paying any interest or fees, but I get money back from them.
Or my Chase Southwest Airlines card. I build up enough points every year for several round-trip tickets to visit family or go on vacation. Once again, I make sure I pay off my balance each and every month. So I never pay interest, but I save hundreds (if not thousands) on airfare every year.
10 – don’t buy it if you can’t afford it
It’s a simple principle and the perfect one to end with. Chances are, if you have to charge something then you probably can’t afford it in the first place. So if you find yourself using credit cards because you feel like you have no other way to pay for things, it’s time you sat down and started a budget. Learn how to live within your means!
Interested in other Debt-Free living tips? Try 25 Things Frugal People DON’T do!
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