A Few Things You Should Never Do With Credit
Most people use credit to make purchases, or some, just keep their heads above water, but the following rules for using credit will help you stay out of credit trouble.
- Pay at least the minimum amount due and pay it on time.
While making the minimum payment will likely never get the card paid off, it will at least keep you from getting a mark against your credit.
So if the minimum is all you are able to make, do at least that.
Never make a payment late! Keep in mind the "date due" on your statement is not the date you need to pay the bill.
In fact the way credit card companies work, you need to send your payment in within 2 to 3 days of receiving your bill.
If you send the payment too soon, the company just posts it as an extra payment for the last billing cycle, and if you send it too late, they charge huge late fees (as they rub their hands together in glee). - Do not max out a credit line.
If you have maxed out a credit card or a line of credit, stop using credit until you have the balance paid back down to 30% of the total available or less.
The best way to use credit, if you use it at all, is to only use up to 30% of the amount available. - Avoid using one card to pay off another, especially if you are paying off the one just so you can charge it up again.
While it is okay to transfer balances to a card with a lower rate once in a while, it is far better to just get balances paid off completely instead of playing musical chairs with the balances.
Be aware there is usually a charge to transfer balances, so find out what the charge is before you decide to do the transfer. - Do not pay bills with a credit card.
Some people use a credit card to pay all of their bills and then pay the card balance in full each month.
Their reason for doing this is usually to gain points or frequent flyer miles with their purchases.
If you use this method and always pay off the card - every month - it works.
The problem is that very few people are disciplined enough to keep the balance of the card low enough to pay off. - When making purchases if you have a choice between using cash, a debit card (where the money is pulled directly from your checking account), a check or a credit card - use any option but the credit card.
Studies show that people spend more, on average, with a credit card than with cash.
If you want to spend less, use cash. - A trap many people fell into in the past few years was buying a house they couldn't really afford.
There was a time when mortgage companies wouldn't lend money to a person that couldn't afford the payment.
Somewhere along the way, that was no longer the case and because of that, many people got into mortgages they could not afford.
Many started out okay, but after a bit of time, the payments ballooned and they were not making enough to afford the increase.
If you find yourself in a position where you are unable to make your house payment, even for one month, put the house on the market as soon as possible! Another option is to rent out any extra space to help you make your mortgage payment.
You can rent out an extra room or even rent storage.
A third option is to rent out the whole house, charging the amount of the mortgage payment and move to a less expensive place yourself.
Unfortunately when people get into trouble with their mortgage payments, they are usually in denial of how big the problem is and they don't react until the house is in foreclosure.
By then it is often too late. - Do not borrow money to pay for something you want but could live without.
If you can afford it you will be able to pay for the item without borrowing.
If you can't afford it, wait until you can. - Finally, if you are one of the lucky few who has good credit, do not allow friends or family members to use your credit to make their purchases.
Again if they could afford it, they would buy it themselves.
If you really want to purchase something for another person, purchase it and give it to them - don't expect to be paid back.
While lending to friends and family sometimes works, it usually doesn't and you will be left with the debt.
It is easier to simply avoid the whole situation.
Source...