Savvy Credit Card Use: Pay Off Your Balance Each Month

There’s a reason that plastic is becoming the most popular method of paying for things.

Credit cards are convenient to carry, and they provide a way for you to make large purchases quickly and easily.  Additionally, credit cards can help you establish a financial reputation.

However, it’s important to understand that credit cards also have a dark side.

If you aren’t careful, you could end up in debt.  And one of the ways that it’s easy to slip into debt is by failing to pay off your balance each month.

Avoid Credit Card Debt

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Personalize Your Credit Card – It’s Fun But Be Aware

Our society is increasingly interested in self-expression.

We like to feel that things we use are “ours.”  We get vanity license plates or sport jerseys with our own names on the back, among others.

In some cases, this feeling even extends to the way we feel about credit cards.  Many credit card companies let you personalize your credit card, and make it your own in some way.

Ways You Can Personalize Your Credit Card

Teams, Organizations, and Motifs

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Use a Balance Transfer Credit Card to Save Money as You Pay Off Debt

When you have high interest debt, it can slow your efforts to pay that debt down.

The higher the interest rate, the greater the percentage of your payment going toward interest — instead of reducing your principal.

When high interest debt is involved, it can take years, and hundreds of extra dollars, to pay off your debt.  Even if you are paying more than the minimum.

Instead of sticking with the same high interest loan throughout the term, consider using a balance transfer to get a temporarily lower rate.

What is a Balance Transfer?

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When a Credit Card Can Help Your Finances

We often hear horror stories about how credit cards ensnare you with debt, and how the high interest can keep you in financial chains.

If you aren’t careful with your credit card use, this type of situation can be very real – and devastating.

However, like so many things in life, a credit card isn’t evil.

How you use the credit card matters, and that means that you need to be aware of how you are using your credit. vSavvy credit card use can actually help your finances.

Credit Card Rewards: Free Stuff and Cash Back

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How Many Credit Cards Do You Have?

Credit cards have become ubiquitous as a method of payment.

Indeed, it’s much more common to see a customer pull out a credit card than pull out cash.  According to the Federal Reserve, in 2008 the average cardholder had 3.5 credit cards.  However, I have to admit that I have had many credit cards over my life.

One of the reasons that many of us seem to accumulate credit cards, though, has more to do with trying to keep the credit score intact than anything else.

Collecting Cards for Credit History and Limit

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Avoid the Credit Card Minimum Payment Trap

When you use your credit cards, it’s important to be smart about how you do things.

Unfortunately, credit card issuers actually want you to make poor decisions.  They make more money when you engage in certain practices.  The truth is that the best credit card customer is the one that racks up credit card debt, and then pays only the minimum each month.

If you want to avoid getting deeper into debt, and wasting more money on interest payments, you need to watch out for the credit card minimum payment trap.

The Cost of Only Paying the Minimum

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For the Best Credit Cards, You Need Good Credit

For years, many expect that credit cards will provide easy access to credit.

This is because it is often easier to get a credit card than it is to qualify for a personal loan or some other type of loan.

Even with lending standards tightened since the 2008 financial crisis, credit cards are still considered some of the easiest sources of borrowed money.

However, even though you can get a credit card with less than perfect credit, it’s important to note that your credit history still matters.

If you want access to the best credit cards, you need a good credit score.

Low Interest Rate

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Savvy Credit Card Use: Track Your Spending

When you use credit cards, it can be easy to believe that there is no need to track your spending.

After all, it’s not like it’s money in your checking account; a credit card is a loan.

It’s easy to just swipe your credit card and forget about the expense.  This, however, can lead to serious debt down the road.

Indeed, without proper planning, and without tracking your spending, you can easily wind up in debt — and pay high interest fees and even over the limit fees.

Staying Within Your Credit Limit

One of the biggest issues with a failure to track your spending is the fact that you can easily overrun your credit limit.

If you don’t know how much you’ve spent, you won’t know when you are approaching your credit limit.  This means that you could easily overspend without realizing it.

Once you go beyond your limit, the fees start to add up.  These fees are charged on top of your interest costs.  The higher your balance, the higher you interest payments, and the more you overrun your limit, the more you will pay in other fees.

When you get close to your credit limit, or even go over, you are also affecting your credit score (not in a good way).

This can quickly sap your wealth and get you stuck in the debt cycle.

Make Sure You are Sticking to a Budget

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Secured Credit Cards vs. Unsecured Credit Cards

When choosing a credit card, it helps to understand the difference between secured credit cards and unsecured credit cards.

These credit cards are treated differently by the major credit bureaus, and they affect your wallet differently as well.

Secured Credit Cards

These are credit cards that require you to hold money, as collateral, in an account in order to use the card.

A secured credit card requires that you have some sort of “security” indicating that you will repay the loan.  You are charged interest and fees on your purchases, and your payments are reported to at least one credit bureau.

However, the fact that the card is secured means that it isn’t as positive for your credit score.

A secured credit card is normally ideal for those who are trying to rebuild their credit.

If you have had credit problems in the past, you might not be able to get a loan without collateral — and this includes a credit card.  A secured credit card will allow you to begin rebuilding your credit and showing that you are ready to adopt responsible behaviors.

It is important that you understand the difference between a secured credit card and a prepaid debit card.
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History of the Credit Card

The concept of “credit” is not a new one.

Indeed, the idea of having an “account” with a merchant is one that is hundreds of years old.  In some cases, a community member with some standing and reputation could purchase goods at a store, and the merchant would collect payment at a later time, usually at the end of the month, or at the end of the season.

History of the Credit Card

However, during the late 1800s, charge plates and credit coins were beginning to find popularity.

These could be used for purchases, and payment collected later.

The first credit cards didn’t appear until the 1920s.

Gas stations pioneered them as ways to encourage customer loyalty, since they were initially only good at the issuing station.  Later, gas stations began to accept each other’s cards.
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