Credit cards can change your life, especially credit cards with low APR. One way that many people in America use credit cards is to finance their life needs. That is to say they buy things. In fact, according to financial website NerdWallet, the average household that has consumer debt has over $15,000 worth of unsecured debt. While in some ways consumer spending is a good thing – it promotes a healthy economy and gives us things that we need or enjoy – responsible use of credit cards is extremely important.
Following are 4 things you can do to use credit cards responsibly in your life:
According to Military.com, many different types of people need to build credit for different reasons. You might have no credit, bad credit, or old credit and need to build a fresh start. They warn you not to fall for fake “we can fix your credit” schemes. Instead, simply focus on building your credit by obtaining a credit card or two and using credit responsibly. This can mean having a low balance on the account and making small, regular payments to demonstrate your financial responsibility. Remember that building good credit does take time.
While a small balance paid over time can show your reliability and improve your credit, do avoid carrying large balances on high interest cards. Credit cards with low APR are best if you carry a balance. Say you use your credit card to fill your gas tank, buy two concert tickets, buy dinner, then purchase souvenirs at the show – you might put $500 on your card in one night. If you do that a couple of times, on a high interest card, paying just your minimum payment, then you could still be paying for that night out a decade later and pay five times the original cost by the time you pay off the credit cards.
If you have already accumulated credit card debt you can save yourself money by using a credit card balance transfer, that is transferring high interest debt to lower interest cards. This means that if you receive an offer from a credit card for a new card with a zero balance transfer fee and low APR on the transfer this can be a great idea. Just be sure to work on paying that new balance off before the credit cards with low APR offer ends.
Almost every credit card comes with a “grace period”, that is a time between when you charge something and the time you must pay it during which no interest is charged. This means that you can usually buy something on one day, then pay it off two or three weeks later, and never pay a penny interest. Great, right? Yes, it is. But be warned, the Credit Card Act of 2009 does not require a credit card company to offer a grace period. But if they do, they must mail your bill at least 21 days before the grace period expires. So, read the fine print and know your company’s rules, but know that you can use these grace periods to your advantage, if you are careful.
Using credit cards responsibly is an important part of your life. Being informed of the ins and outs of credit card usage is an important first step in the process.
Credit Card Act Notes: http://www.creditcards.com/credit-card-news/credit-card-law-interactive-1282.php
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