Credit is based upon past, present, and future character. Your personal financial conduct is the critical tool used in judging your credit worthiness, for it is the measurement used to determine if you can be trusted with someone else's money. Being a responsible credit card holder can save you thousands of dollars over the years and provide opportunities that may not otherwise be available to you.
Nearly every purchase or consumer action taken today is monitored and recorded by someone. Whether you want to buy a car, house, cell phone, boat, clothes, insurance, or a new television, having good credit will greatly increase your ability to purchase. A responsible credit card holder never steps up to the checkout counter in fear that their credit card may be declined. There are several ways to become a responsible credit card holder. Let's look at the simple ways.
Pay your bills on time: By paying your bills on time you establish that you are a good credit risk. It can also save you hundreds of dollars in late fees. Some credit card companies charge as much as $29 each time your payment is late. If you your account ever goes into default the issuer may raise your APR because they now believe you are a greater credit risk.
Don't pay the minimum amount due: By paying only the minimum amount due it may take years to pay of your debt. It can also cost you thousands of dollars in interest that you could have had working for you. A $2,500 balance may end up costing you nearly $10,000.
Pay a fixed amount each month: If you are making on time payments your minimum payment amount should decrease slightly each month. If you can afford it, pay a fixed amount each month that is higher than your minimum amount due. For example if you minimum amount due is $50 than pay $60 or more each month, even when your minimum payment amount begins to go down. Be sure to choose a fixed amount you can pay each month so that your debt will decrease much faster.
Never skip payments: Always contact your credit card issuer if you are unable to make a payment. You may be able to make some type of payment arrangement that works for you both. Sometimes credit card issues will give you the option to skip a month if you have a good payment history. Remember, whether you pay or not your finance charges will still apply for that month. It is always best to continue paying your fixed amount.
Use cash advances sparingly: Only use cash advances in true emergency situations. Cash advances can run up your overall debt extremely fast. Some credit card issues can charge from 2 to 4 percent cash advance fees. For example a cash advance of 5,000 with a 4 percent cash advance transaction fee would cost you $200. Credit card issuers also charge higher interest rates for cash advances. It is no coincidence that there is a higher rate of default among cash advance users.
As a responsible credit card holder your overall purchase experience will be much more pleasant than that of a person who is less responsible. Please keep in mind that a truly responsible credit card holder is responsible to both the credit card issuer and oneself. |
