Using credit cards to avoid falling prey to debt traps

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Using credit cards to avoid falling prey to debt traps

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When you whip out a wallet full of a bunch of fancy credit cards, it`s often with a lot of pride. But be sure that you have a handle on how you use it, so that you don`t end up splurging more than necessary. Credit cards when used carefully will win you plenty of bonus points, reward deals, scores and cash back offers. However, careless and unplanned spending sprees will lead to more debt than you can dream of in a lifetime. Make sure you have your finances in place and do things in a planned manner when using your credit.

Credit cards are an expensive affair. Surely they make life easier, but they also come with consequences. There are fees you have to pay on your card; there are also interest rates which are applicable. Make sure that you close whatever amount you swipe every month or at least the larger percentage of it. Leaving something for another day will make you unable to cope and eventually you will end up with bills you can`t even begin to sort out anytime soon. Pay up every month and if you have some money to spare at the end of the month, use it close that outstanding balance first and foremost.

Watch your credit score. Firstly, ensure that you avail of the free credit report that comes every year from all the three credit unions and check every entry in it to verify them. Secondly check that you don`t apply for too many cards at once as this does impact your credit score adversely. Stick to 3 or 4 cards and keep the older ones open as closing them will also cut down on your credit score. Understand when your payments are due every month and don`t miss the dates at any point, even if you are traveling. Check how the payment plan may change and make sure you know about any changes in interest rates applicable as all this is disclosed before hand to the clients by the banks as per the new credit card rules.

Pay attention to your credit limit. Make sure that you do not use up more than 30% of the credit limit available to you. This is a bad sign to the creditors and it also tends to lower your credit scores considerably. They are always looking at what amount of available credit is being used by consumers and when you go overboard on it, it sends off warning bells in their heads.

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