Business Time

Your credit cards play an important role in building your credit score. Today, if you have a credit card you must use it because your credit card issuer will, otherwise close your card. Closing your card will definitely hurt your credit score, so you use them to maintain a healthy credit score.

Credit cards need to be handled properly if you want to be hassle free. If you can use your credit cards wisely, you may be rewarded with a good credit score, a rate cut in interests as well as an increased credit limit. Credit cards used in the wrong manner might result in a bad credit score, increased interest rates and lower credit limit of course.

Credit cards don’ts

When using a credit card don’t:

• Make everyday purchases like grocery, clothing and gas with your credit card. Do not use your credit card as a replacement for cash. These are items you need to purchase with cash and if you use your card for ordinary purchases like this, you may get in to this habit and hence incur huge credit card debt without realizing on time.

• Make minimum payments only. If you make minimum payments only, your time to pay off the entire loan will increase and hence it will also increase your interest rate. Pay off as much as you can to get to get off the debt burden quickly.

• Make purchases on your credit card for things you cannot afford to pay back. Although your credit card may seem to be the easiest solution to that expensive camera you wanted to buy, but first analyze whether you can pay back the money within time.

• Cancel or close a credit card without first finding out how it will affect your credit score.

Credit card dos

When using a credit card, do:

• Think over before taking any decision when you have to make purchases using credit cards. Make a distinction between things you want and things you need.

• Inform your creditor if you will be late in paying your monthly dues in a particular month. Most creditors are co operative if you confide in them.

• Keep your balances low. This will help maintain a good credit score. Again, lower balances are also easier to manage.

• Negotiate with your creditor for a lower rate of interest. The interest rate you are offered determines the amount you pay in order to hold a balance on your credit card. Make sure you get the best deal. Evaluate the rate of interest you pay regularly to confirm a good deal