Managing your credit accounts

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Managing your credit accounts

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Getting a credit card is a stepping stone in life for many people these days. But it is important to realize that with power comes responsibility. And credit cards give you the power of being able to spend a certain amount of money which you would not normally carry around in your wallet. They also give you the power to spend an amount which you currently do not have to your name. but with that, they bring the responsibility of you having to pay back to the bank the amount that you used to purchase whatever that you had to purchase.

Owning a credit card is not that easy, but once you get it, it is important to manage it well. In order to get a credit card, you will have to provide sufficient documentation and identity proof to prove that you are capable of making repayments. You will also need to have a good credit history.

The first step to managing a credit account is choosing the right one. You need to know what sort of needs you have with respect to expenditures. There are two types of cards, the high interest rate cards and the lower interest rate ones. And then there are cards with a high credit limit and a lower credit limit. Based on your needs, you can choose one type of card over the other at the expense of the other criteria. You cannot get the best of both worlds on the same card unless you have been with the bank for a number of years and it is your second or third card and you must also have a very good credit history.

Once you get approved for your card, the next step is to start making purchases. It is only when you make purchases that you will start building on your credit history. Try to make only important day to day essential purchases rather than unnecessary expenditure just for the sake of getting points or improving your credit history. And make sure that you make repayments in time without delay every time. This is an important step to building your credit score. Also ensure that you do not spend more than thirty percent of your credit limit. If you do so, you might end up being branded as a compulsive borrower and this can harm your credit score. It`s all about keeping your debt to credit ratio as low as possible. The more credit accounts you have the better, but also it will get more difficult to manage all your accounts if you have more of them.

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