Four Ways to Avoid Plastic Pitfalls
Credit cards can be a great tool to build credit. However, their convenience can be a help or a hindrance, depending how you manage your spending. According to a recent report, credit card debt in America reached almost $800 billion in 2005. So how can you reap the benefits without falling victim to the pitfalls of plastic? Here are four suggestions to keep the upper hand on your credit cards:
- Avoid special offers. Introductory rates, delayed payments, balance transfers or a combination thereof, may seem attractive at first. However, once the temporary rates change and the interest is due, you’ll find that you will pay more for these special offers.
- Beware of universal penalty fees. If you fall behind on one credit card payment, other credit card companies can charge you their highest penalty rates as well, even if you are in good standing with them.
- Evaluate special rewards programs. Reward programs are only worth while if you pay off your credit card balance each month. Otherwise, you may find yourself paying higher interest rates or annual fees.
- Monitor your balance. 30% of your credit score is made up of credit card usage. Keep each account balance below 30% of the available credit limit when trying to purchase a home.
Following the four tips above will help you avoid the pitfalls of plastic. For more practical financial tips, call Marc.
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