Credit cards are easy to get carried away with. While the illusion is there of free money, this is not the case. The longer you take to pay the money back, the more you will owe. Credit card interest is the thing that catches out most people.
Your credit score is a number that determines how reliable you are to potential lenders. The higher the score, the better you look. Credit scores can affect possible loans, mortgage applications, and credit card applications. They also have a role to play in whether or not a landlord will let a property to you. A bad credit score can significantly affect your financial reputation.
There are other forms of debt and spending patterns that consolidate into your credit rating. To get out of a bad financial situation, avoid one entirely, or improve your credit score, take a look at the top three dos and don’ts of using a credit card.
Don’t – Bite off More Than You Can Chew.
Credit cards are there to make large payments, regular payments and help in a tricky situation. They are not there to rely on or make lots of small amounts that add up quickly to something you can’t manage.
Limit credit card spending to the essentials and what you can afford to pay back.
Do – Pay Bills On Time.
Late bills can damage your credit score. And we already know what a bad credit score can do to your financial history.
Be sure to set reminders or automatic payments to pay bills on time. For example, a monthly standing order will help everything stay on track without the hassle of remembering to pay every month.
Don’t – Go Over 30% of Your Credit Limit.
Many credit experts say that you shouldn’t go over 30% of your credit limit to maintain a healthy credit score.
This level keeps repayments less overwhelming, avoids late fees and minimum payments reach clearance faster.
Do – Pay Credit Card Debt Off As Soon As Possible.
As soon as your monthly paycheck lands in your account, make sure you put money towards your debt. You must factor debt repayment into your monthly budget.
Anything spare has to go towards debt repayment first to maintain a good score.
Don’t – Confuse Credit Card Balances With Free Money.
A credit card can be an exciting thing to get. The credit limit is compelling, and it’s tempting to spend it on things that aren’t necessary. But, remember – you must pay that money back with interest. That means, unless you have a special 0% interest card for a limited time, you will have to pay back more than you spent.
Do – Consider Consolidating All Debt on One Card.
When debt spreads across multiple cards, it does get harder to keep track of everything by putting everything onto one card with a 0% interest rate for a while. How to move your credit card debt may seem like a big task, but it’s pretty simple once everything is broken down step by step.