Credit Card Tips & to Do's

Credit cards can be a good tool to use for personal finance, if you follow some discipline and live within your means. The following are tips I have found useful over the years to help save money and improve my financial resources.

1. Shop Around!

You can easily look around from the cards out there and see a wide variety of rates. Don't be shy; if you ask around, you can probably get those rates matched by another bank/issuing company. You the consumer have the power to make this happen; the competition is intense to bring in new business, and if they want you bad enough, they will match or beat the rates of a competing bank.

2. Get a no fee card

Fees alone are like a hidden interest rate, and can be substantial. You can easily find a no fee card (almost all of them are that way today). If you have to get a card with a fee, make sure that your spending levels justify paying the fee, though I would find this difficult except for the wealthy and upper income.

3. Get a card with rewards

If you're going to get a credit card, and can pay it off monthly, get one that pays you to hold it. Hotel credit cards often have no fee, and can easily rack up free nights with everyday purchases. Airline cards are nice, but often carry a hefty fee, so make sure that your miles accrued are worth more than the fee you pay every month.

4. Ask for a rate reduction

Sometimes a simple phone call can result in your rate being slashed in half or more. While I won't disclose the bank, I was able to get one card reduced from 19.8 to 9.9% with a simple phone call. Take the time and call all of your credit card companies and see if you can get a reduction. The worst thing that could happen is for them to say no!

5. DO NOT close a card with an extended payment history

This can be a major mistake, for two reasons. One is that it reduces your available credit at hand, which makes your debt usage ratio go up. The second is that it makes your credit history look shorter. Both of these can have a negative impact on your credit score, so be cautious of this before you go on a card cutting spree and then find yourself needing credit for a house or major purchase months down the road.