Use Credit Cards Wisely

Online, May 19, 2011 (Newswire.com) - People use credit cards every day, and they use them for a variety of reasons - these reasons vary from paying for vacations to starting a new business.

Whatever your reasons, it's important to remember that improper use of a credit card could lead to unmanageable debt.

A credit card can be a tool that you can use to access a line of credit extended by the card issuer. You can use the money to make purchases, do balance transfers and make withdrawals from ATMs. While using a credit card is a convenience, keeping a balance on the card is expensive, since the average interest rate currently is around 15 percent.

Make every effort to pay off your balance at the end of each billing period. You shouldn't make a purchase on the card unless you can pay off that purchase within a month or two. You should not have more than 30 percent of the available limit used on your card at any given time, as having more than that can negatively affect your credit score and chances for receiving any future loans at decent rates.

One good rule of thumb is to never use your card at gas and grocery stores. Some gas stations charge more per gallon if you purchase your gas with a credit card. Generally speaking, it's not wise to use your card for food, clothing or gas, because these are everyday items and can lead to temptation to do so more frequently, which will lead to greater debt.

Make your payments on time and in full each month. If you're late, even by just a day, the creditor assesses an expensive late fee to the account. If you are more than 30 days late, you'll find a negative mark on your credit report.

But using a credit card the right way can effectively help you build up your credit and increase your credit score. But use your cards wisely.