According to National Foundation for Credit Counseling spokesman Bruce McClary, there is no one-size fits all financial situation. Everybody varies in how they set up and manage their budget and make decisions. This means the most common advice isn’t meant everybody.
While credit card tips can be easy to understand in do this and not that, the advice isn’t applicable to everyone. This advice could hinder some rather than helping them.
Don’t Use Credit Cards
People get into trouble when they charge too much and are hit with finance charges. This advice doesn’t apply to those people who pay their balances off in full each month. There are many benefits to using credit cards such fraud protection, convenience, rewards and building credit.
There’s a stigma of credit cards, but they are effective ways to manage your money, but you need to know what you’re doing.
Use Credit Cards Regularly
People who constantly have credit card debt should not be using credit cards. Rather, they need to use debit cards or cash to help them curb their spending. On top of that, not everybody will not be eligible for credit cards.
Don’t Pay A Yearly Fee
Many credit cards don’t charge a yearly fee. However, cards with these fees tend to offer some rewards and sign-up bonuses. It would be great not to pay a yearly fee but look at the benefits. They may outweigh the fee.
Avoid Card To Card Balance Transfers
By constantly moving one card balance to another, it doesn’t convey the real problem – paying the debt down and off. Plus, there may be added fees of three to five percent based on the balance you have. However, they do give you some breathing room, as there tends to be no finance charges for a period of time, allowing you to pay off the debt faster.
It’s Better To Use Reward Cards
If the card is being used to pay bills and you can completely pay it off each month, then using a rewards card is a good idea. However, if you carry a balance, there are finance charges, which negate the rewards received.
Don’t Shut Off A Credit Card
When you close an account, your credit rating can take a beating. Why? Scoring models want to see that you’re using less than 30 percent of your available credit and that you have an established credit history.
If you’re not using a card with an annual fee and there’s not much of a balance on it, canceling may be a good thing. If you had it a while and there’s no good reason to cancel, consider keeping it and adding a recurring monthly bill to it and pay it off each month to ensure the card stays active.
Pay The Bill Off Each Month
It’s important to pay your credit card off each month, so you’re not hit with finance charges. However, if you’re falling on hard times, you should make an exception and pay the necessities first – rent, food, utilities, etc.