Credit
In this modern age, it is nearly impossible not to have a credit card if you want to do things like get a hotel room, purchase something online or over the phone, or even get a subscription. Therefore it’s key to understand exactly how to go about using your credit card before you start blindly swiping.
Take a look at some of the top do’s and dont’s of being the owner of a new credit card.
Don’t Buy Things You Can’t Afford With Your Credit Card
First and foremost don’t look at your card as a temptation to buy everything you’ve ever wanted with the mentality that you can “pay it back later.” You should always have a healthy regard for interest rates, and the fact that sooner or later you’re going to have to pay up.
So often it’s easy to fall into the grips of desire and wanting something so much that you’re willing to pay for it at a high price that sends you into a period of debt. In the long run, it’s much healthier to save for something, use the credit card to pay for it, and use the savings to pay it off in full.
This way you are spending within your means and building your credit score.
Do Keep Your Balance No More Than 30% of Your Credit Limit
Make sure that you never keep a balance larger than 30% of your total limit. By focusing on your balance due rather than your total available credit, you will have a much easier time staying within this number.
If you let this percentage get higher than 30% it starts to affect your credit score and puts you at risk for having a higher debt to income ratio which is one of the biggest warning signs of bad credit.
Don’t Get a Card With a Huge Interest Rate
Before signing up for a card that has all sorts of benefits and exciting features, make sure that you read the interest rate in the fine print. The interest rate is the determining factor of how long it’s going to take you to pay back your debt and at what price.
Anything that is higher than 20% starts to become a pretty hefty influx of fees piling on. Don’t become a victim of failing to read the terms before signing a contract.