Credit card tips

Surprise, I am going to tell you probably the opposite of everything you ever have heard about credit cards. Not only am I not going to tell you to use only cash and never use a credit card, I want you to think about ALWAYS using your credit card.

Use your credit card for every purchase you make. This will give you a higher credit rating, you will have an instant record of every transaction, and by using a cash back card, you will get, well, cash back. The trick is to pay off the balance by the due date each month.

Get a card! I know some people that have never had and never want a credit card. The problem is, they will never be able to do things like rent a car or get a hotel room. They really are a necessity of life these days, so get a couple. Also, credit can be impaired by not having a card. Having no credit is almost as bad as having bad credit. If you have bad credit, get a secured credit card. These are like bank accounts, you deposit say $100 and get a $100 credit limit on a Visa card, great for building credit.

Use a credit card and not a debit card. Debit cards have fewer consumer protections than credit cards. If you loose your credit card, you are only liable for $50 maximum in most cases, and most card companies will waive that. Most debit cards don’t have such protections. If someone uses your debit card to drain your bank account and go into overdraft, you will be stuck with the overdraft fees.

Have a few, but not too many credit cards. Here again, you want a good credit rating, but if you have too much available credit, you may get penalized as well. Also, by having more than one card, you have options if you card company is one of the many that are jacking up their interest rates, increasing rates on balances you already have, or shorter bill cycles. These things should be criminal, but guess what, card companies do them every day. Keep your options open. If one company does something nasty, stop using that card (don't close it because that will just hurt your credit rating) and use another. If you carry a balance on a credit card, quit it! Do whatever you can to pay it off.. Work extra hours, spend less, or simply use your savings to pay off the balance. I say use your savings because what are you getting one, maybe two percent at the bank while your card is charging you 20%? Worst case, borrow some money to pay down your cards. Again, you may pay 10% to the bank, but won’t pay 20% interest on the card. The most important thing here is to think about why you were in debt in the first place. If you are living above your means and borrow to pay off your cards, you are going to be back in the same place very soon. Change yourself before borrowing to pay off debt.

Don’t put small stuff on a credit card if you can’t pay for it, just don’t buy it. That cheeseburger you put on your card today will be there with interest 10 years from now if you don’t manage your money wisely. That said, I put Tic-Tacs and gum on my credit card because I know I will pay for it at the end of the month and get cash back.

Use a personal card even if you have a business. Business credit cards have potential unlimited liability, not the $50 cap most individuals have. You have to sign for personal liability even to get these cards, so I would stay far away. Better to just use your personal card for all your purchases.