Saturday, March 22, 2008

10 Credit Card Tips to Keep You Out of Debt

This blog has it's first guest post. I haven't written anything on credit cards and when Heather Johnson volunteered to write about how to be using your credit cards, I thought it a great thing to share with you. Yes, if anyone of you would like to share some of your personal finance stories, please feel free to comment or write to me (ranjanvarma at gmail dot com). Over to Heather Johnson.

The moment we come of age, credit card companies are stuffing our mailboxes with enticing offers and convoluted fine print. It's no wonder there is a staggering problem with credit card debt these days, particularly in the United States. However, credit cards don't have to be your enemy. In fact, they can be quite useful and it's very hard to exist without at least one major credit card.

Below are 10 credit card tips to keep you out of debt:

1. If you are someone who will carry a balance from one month to the next (which is most of us), then your finance charges should your biggest priority. Choose a card with the lowest percentage rate available.

2. When you do find a "Zero percent interest" or "Low interest" card, read the fine print and make sure that interest rate isn't going to drastically hike after an introductory period.

3. Sometimes, "fixed" rates aren't fixed at all. With a little warning ahead of time, credit card companies are free to increase your rates at any time.

4. Don’t carry your credit card around with you. Unless you are specifically leaving the house to use it, keep it at home so impulse shopping won't tempt you.

5. Carefully read each month's statement, as companies certainly do make mistakes. Also, you want to make sure that no unapproved charges have been made.

6. Watch out for annual fees. Some cards have no annual fees, other cards (particularly those with big rewards) may charge quite a bit.

7. Can't afford a big ticket item that you really want? Don't use the credit card as a crutch. It isn't a gateway to free money and you will have to repay it eventually.

8. Always pay more than the minimum charge on your bill or you will never pay it down.

9. Never mail your monthly payment in late. Even an honest mistake could result in a huge rate hike as penalty. Credit card companies are not sympathetic to mistakes, unfortunately.

10. Create a household budget and stick to it.

Credit cards are a necessary evil in the 21st century. Even if you are liquid enough to never have to charge something, you will need a credit card to buy a plane ticket, reserve a hotel room and more. In other words, it is in your best interest to learn how to use a credit card wisely, as it will always be a part of your adult life.


Heather Johnson is a freelance business, finance and economics writer, as well as a regular contributor at Business Credit Cards, a site for business credit card and best business credit card offers. Heather welcomes comments and freelancing job inquiries at her email address

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