Credit Card DO's and DON'Ts -- Common Credit Card Mistakes

Credit Card DO's and DON'Ts -- Common Credit Card Mistakes

In today's lending environment, you have to have established credit in order to get approved for a mortgage.  Unfortunately, the easiest way to establish a credit history and add to your score is through credit cards.  So, if you've got a pocket full of plastic, there are some DO's and DON'Ts you should always remember about credit cards.

DON'Ts:

• Use your credit card to buy things you can't afford -- It is always best to save for the items you want to buy, or if necessary purchase on an installment loan.
• Use a credit card to make everyday purchases -- This is a habit that leads to debt without knowing how you go there, and nothing to show for it.  The only time when you should make everyday purchases on a credit card is when you pay off the entire amount every month.
• Make just the minimum payment -- They are called revolving debt for a reason.  If you make the minimum payment, The interest paid increases without decreasing the balance.
• Close a credit card without knowing how it affects your credit score -- Sometimes closing an established credit line will decrease your credit score.  Know its impact on your history.

DOs:

• Make good decisions about buying items you need versus those you want -- If it is something you "want", save up for it, you will appreciate it even more.
• Stay below 50% of your credit limit -- Keeping you balances below 50% of your credit limit will help maximize your credit score.
• Negotiate a better interest rate -- You won't get a better rate if you don't ask for one.
• Contact your creditor if you are having trouble -- Let your creditor know in advance if you are going to be late with the payment.  Some will even waive the late fee.

Credit Cards can be a useful financial tool if used properly, but can cost you more than money if not.
 
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