ATTENTION SHOPAHOLICS......What are Credit Cards For?...... How To Evaluate Them.
February 26, 2010 California, USA. Each individual have their own personal preferences in using their credit. But somehow, I wonder how some individuals manage to end up overspending on their personal credit card to the point they end up in a tight bind. I would understand using the credit card to the max if it is for medical purposes or any kind of emergency. But still some people use all of their credit for non emergency items.
WHAT ARE CREDIT CARDS FOR?
Here are some simple guidelines:
(1) EMERGENCY - One of the things you should remember is use it as an Emergency. SHOPPING is not an emergency. And yes this includes impulse and stress shopping. By emergency I mean LIFE AND DEATH situation or MEDICAL EXPENSES.
(2) MONTHLY RECURRING EXPENSES - Use your credit card for groceries and your basic monthly shopping. When doing this keep in mind that the amount of money you spend must be paid in FULL at the end of the month or when the credit card bill is due. Sad to say but this is one of the privileges a credit card holder has: To be able to use other people's money for 30 days without interest while building up credit. Make sure to check your credit cards policy on this one before you do it.
(3) BUILDING CREDIT - credit cards are use by creditors to see the credit worthiness of a person. Paying your credit card in full in 30 days or on a timely manner will give you a better rating from the credit company. This can affect your interest rate when you finance your house later on.
(4) EARN POINTS AND DISCOUNTS - Credit card offers some points. These points maybe used for airline mileage, and / or discounts to products, merchandises or services. So this is one of things you should take advantage but not to the point of using this as a reason to max out on your line of credit again!
So next time you swipe those cards, think of the four reasons in using your credit card. Stick with the four basics and you'll be able to maintain a triple AAA rating on your credit report.
EVALUATING YOUR CREDIT CARDS
One final note, Do you have too much credit card under your name? Come on open your wallet and start counting it now. Do it now or you'll never do it!!! How many do you have? Is it more than three? Just keep it to a minimum of three personal credit cards. So if you have more than three, evaluate your credit card by looking at the following:
(A) CREDIT LIMIT - Higher is better but depends on you you might want to have lower limit just to keep you under control
(
INTEREST RATE - The lower the better
(C) BENEFITS - does it have mileage points, discounts on products, merchandise and services?
(D) FEES - how much do they charge for Overdraft Fees, Late Fees, Foreign Exchange Fees, other fees.
(E) ANNUAL FEES - Do they have annual fees? Personally if you have good credit, credit card companies will give you credit without annual fees. So do what I did The first thing that I eliminated is American Express!!! They used to charge 25 to 50 dollars. But why pay if you get it free of annual fees.
(F) CUSTOMER SERVICE AND RELATIONSHIP - Do they have a policy on courtesy call about taking off your late fees when you apologise for being late and requested them to give you that courtesy adjustment? Usually they will do this courtesy adjustmen for two times a year. How do they respond to your request of increasing your credit limit? How does customer service behave in helping you with your needs?
Once you have evaluated your credit card, KEEP THE BEST THREE AND CUT OFF THE REST OF IT. Why three? So you have 1 Credit card that you use a lot (That is the best Credit Card deal you got) and the other two for reserves and emergency line of credit. Don't forget to use the two reserves once in a while. Because if you don't use them, some banks close them.
Hope this helps in controlling your credit card. Remember the more credit card you have the higher the risk of liability (Your worst nightmare is Identity Theft through Lost or Stolen Credit Cards). So, protect yourself by limiting the number of credit cards to three.
Happy Controlled Swiping!
WHAT ARE CREDIT CARDS FOR?
Here are some simple guidelines:
(1) EMERGENCY - One of the things you should remember is use it as an Emergency. SHOPPING is not an emergency. And yes this includes impulse and stress shopping. By emergency I mean LIFE AND DEATH situation or MEDICAL EXPENSES.
(2) MONTHLY RECURRING EXPENSES - Use your credit card for groceries and your basic monthly shopping. When doing this keep in mind that the amount of money you spend must be paid in FULL at the end of the month or when the credit card bill is due. Sad to say but this is one of the privileges a credit card holder has: To be able to use other people's money for 30 days without interest while building up credit. Make sure to check your credit cards policy on this one before you do it.
(3) BUILDING CREDIT - credit cards are use by creditors to see the credit worthiness of a person. Paying your credit card in full in 30 days or on a timely manner will give you a better rating from the credit company. This can affect your interest rate when you finance your house later on.
(4) EARN POINTS AND DISCOUNTS - Credit card offers some points. These points maybe used for airline mileage, and / or discounts to products, merchandises or services. So this is one of things you should take advantage but not to the point of using this as a reason to max out on your line of credit again!
So next time you swipe those cards, think of the four reasons in using your credit card. Stick with the four basics and you'll be able to maintain a triple AAA rating on your credit report.
EVALUATING YOUR CREDIT CARDS
One final note, Do you have too much credit card under your name? Come on open your wallet and start counting it now. Do it now or you'll never do it!!! How many do you have? Is it more than three? Just keep it to a minimum of three personal credit cards. So if you have more than three, evaluate your credit card by looking at the following:
(A) CREDIT LIMIT - Higher is better but depends on you you might want to have lower limit just to keep you under control
(
INTEREST RATE - The lower the better(C) BENEFITS - does it have mileage points, discounts on products, merchandise and services?
(D) FEES - how much do they charge for Overdraft Fees, Late Fees, Foreign Exchange Fees, other fees.
(E) ANNUAL FEES - Do they have annual fees? Personally if you have good credit, credit card companies will give you credit without annual fees. So do what I did The first thing that I eliminated is American Express!!! They used to charge 25 to 50 dollars. But why pay if you get it free of annual fees.
(F) CUSTOMER SERVICE AND RELATIONSHIP - Do they have a policy on courtesy call about taking off your late fees when you apologise for being late and requested them to give you that courtesy adjustment? Usually they will do this courtesy adjustmen for two times a year. How do they respond to your request of increasing your credit limit? How does customer service behave in helping you with your needs?
Once you have evaluated your credit card, KEEP THE BEST THREE AND CUT OFF THE REST OF IT. Why three? So you have 1 Credit card that you use a lot (That is the best Credit Card deal you got) and the other two for reserves and emergency line of credit. Don't forget to use the two reserves once in a while. Because if you don't use them, some banks close them.
Hope this helps in controlling your credit card. Remember the more credit card you have the higher the risk of liability (Your worst nightmare is Identity Theft through Lost or Stolen Credit Cards). So, protect yourself by limiting the number of credit cards to three.
Happy Controlled Swiping!
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