Credit Card Smarts

Nowadays, numerous people have credit cards. There are just so many different credit cards. Some credit card companies offer very low introductory rates, and others offer enticing reward programs. Learning how to wisely use your credit cards and avoiding financial disasters is one of the most important issues for all credit card users. In myFICO.com's article, "Average Credit Statistics," it states, "...Today's consumer has a total of 13 credit obligations on record at a credit bureau. These include credit cards and installment loans. ...Of these 13 credit obligations, 9 are likely to be credit cards and 4 are likely to be installment loans."

When you use your credit cards wisely, there could be a multitude of benefits for you. For example, you don't have to carry cash with you when you go shopping. You only have to make one payment, before each month's due date. On the other hand, the use of credit cards might also bring chaos and wide despair. It is extremely easy to overspend and purchase extra objects that are not necessary. You could make late payments or only pay the minimum due each month. You would then, however, have to carry large debts on your credit cards.

For example, you have a $1,000 credit card balance and you make the minimum payment of $25 each month with no more extra purchases. If the credit card company charges you an interest rate of 14%, it would take 123 months of payment plus a total of $667 accumulated interest to pay off this balance.

Therefore, to avoid the financial charges and late fees from your credit card companies, you should establish better spending habits and create a budget that is more suitable for you. You should watch your spending carefully. Every time you make a purchase, ask yourself, "Can I afford to pay for this?" and "How will I pay for it?" Don't make impulse purchases. Only buy what you absolutely need and not everything that you want. Always record your purchases and track where your money goes. Remember, you should never max out your credit limit and only try to keep your credit card balance low. Make sure that you pay your monthly payment on time, and pay the entire amount of your balance.

On the other hand, you may also want to consider saving your money before making purchases. That way, you might have time to think about whether or not you really need something. A good saving habit is to make yourself financial secure. Many people say that they don't have enough money to save up. However, you don't need to save a lot each day. A modest saving each day can help you build a lot in the long run. For instance, if you simply save $1 a day for ten years and then deposit average $30 each month into your savings account, you would have $4658, with an annual interest rate of 5%. Of course, there are also many other opportunities for you to invest money.

All in all, be smart with your credit cards and take control of your own financial future.