How to Use Credit Cards to Avoid Bad Credit

Credit cards are one of the biggest enemies of good credit.  Having credit cards can be great when you need them, if you can use them properly.  Unfortunately, several people end up with a stack of credit card debt they can’t pay.  It usually starts out small.  You charge something and tell yourself you’ll have the money for it in a couple of months.  Soon you’re making payments late and then not making them at all.  Late payments start to add up, and your interest rate practically doubles. 

Once you let it get this far, it’s hard to get out.  The best way to fix the situation is to never let it get out of hand in the first place.  By learning a few ways to mange your credit cards responsibly, you’ll be able to enjoy the benefits without all of the frustration. The following guidelines will help you avoid bad credit or avoid making it worse.

 Responsible credit card use starts before you even get your card.  You should pay close attention to the credit card offers you receive.  Before you apply, make sure you read and understand all of the terms.  Usually they hide all of the less desirable terms in the fine print, so don’t skip over this.  If you don’t pay attention, you could be hit with ridiculous fees before you even get your card.  The last thing you want to do is start off in debt.  When you’re looking over the terms, look at the interest rates as well.  Many times they start out low then skyrocket after a few months, so be sure to know what you’re signing up for.

Another guideline to avoid bad credit is to only have the bare minimum number of credit cards.  It’s always a big mistake to load your wallet or purse with credit cards.  It’s just too easy to use every one.  Without even realizing it, you’ll have charged more than you can afford to pay back.  The best way to avoid this is to only have the least amount of cards possible.  In fact, most people only need one card that they can use for emergencies. If you need two or three, that’s fine, as long as you don’t treat them like free money.  Just remember the fewer cards you have, the less you’ll ever have to pay back.

While the way you use your card is important, what happens after you use it is even more important.  If you make a charge to your card, you should pay it off in full each month.  It may seem like a good idea to only pay the minimum, but it’s the worst idea.  The credit card companies want you to pay the minimum, because they know it’s almost impossible to pay off the balance this way.  Keeping this in mind, pay as much as you can afford to, even if you can’t pay the entire balance.

Besides paying the balance in full, you should always make your payment on time.  It’s also not acceptable to miss a payment.  When you get your bill in the mail, pay it immediately.  Credit card companies charge huge fees for late payments that can start to add up after a while.  If fees aren’t enough reason to pay on time, the credit card companies will sometimes raise your interest rate if you’re late.  Your interest rate could double or even triple.  This goes for missed payments as well, so make a payment each month when it’s due. 

If you use your credit cards wisely, you’ll be able to avoid ruining your credit.  If you already have bad credit, good credit card use can repair it.  Follow the guidelines above, and you’ll never have to worry about credit card debt again.