Credit Cards: What to Know and How to Manage Them

Credit cards. These little plastic cards are double-edged swords in the world of money. While credit cards help you build credit so you can buy large purchases and get loans in the future, they can also get you in a lot of trouble.

I have five credit cards for the stores I shop at the most. While most credit card companies will start you off with a small limit (anywhere from $200 to $500) Victoria’s Secret is notorious for increasing credit limits without a customer asking. I got an email once from the company saying, “We’re having a sale and increased your credit limit! Get shopping!” I started out with a $500 credit limit with them and it is now well over $1200.

Below are some tips to keeping your credit cards in check:

  1. Only get cards you know you’ll use. Having a credit card is useless if you aren’t going to use it. Don’t apply for a card to get a one-time discount at a store. Instead, look at which stores you frequent the most and research the discounts and deals they offer if you have a store credit card.
  2. Don’t skip or pay late. Skipping or being late on payments can result in a late fee or negatively affect your credit. Bad credit can cause problems with employers, insurance, loans and even cell phones. You don’t want to go to purchase a house and realize your credit is so bad that they reject your loan application.
  3. Keep track of your due dates. As noted in #2 you don’t want to miss a payment. The repercussions can suck and getting your credit back to where it should be can take awhile. I use an app called Bills Monitor to keep track of my monthly bills. It costs $0.99 but I highly recommend it for anyone who has a hard time looking after his or her bills. You can set payment reminders and it gives you a total of how much you are paying in bills each month.
  4. Know your limits. Not only do you need to know the credit limit of your cards but know your personal limits. How much can you afford to spend? Will you be able to pay it off in a reasonable amount of time? Are you making enough income to cover your purchases?
  5. Interest is a bitch. The way credit card companies make money off of consumers is through interest. The longer you take to pay off a card, the longer you’ll get charged with interest. Look for cards that allow you a grace period to pay off your purchases without gaining interest. PayPal Credit had a nice deal where you have 6 months of no interest on purchases over $99.
  6. Less is more. Having too many credit cards can increase your chances of missing a payment. However, you shouldn’t stick to just one card. Forbes notes that having two cards is better than one because it can improve your credit and it’s good in case of emergency.

Keep all of these in mind when you start to look for a credit card. Look for companies that will give you low interest rates and a decent credit limit. Exert self control when shopping and keep track of all of your purchases.

What companies do you have credit cards with? Which has the best deal?

 

*Feature photo originally posted on Instagram by @Tyrese

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