Real Estate Innovation

Credit Smarts: Using Your Card Intelligently

So you’ve received a sparkling credit card with a sky-high limit. Not so fast! Before embarking on a huge shopping spree there are a few important things you should know in order to avoid a credit crisis in the future.

Is your new credit card for “emergency use only”? If that’s the goal, it’s necessary for you to define what type of situation will be considered an “emergency.” Perhaps it’s a leaking pipe flooding the basement. Or it could be the Annual Shoe Blowout at the Super Shoe Warehouse. No matter what, you should decide on the card’s purpose and commit to it.

Maybe you applied for a new credit card to improve your credit rating, which is a great idea if you’re young and planning to make a major purchase, like a home, someday. If so, remember to use your card in a way that helps your efforts, rather than hurting them.

A great way to maintain an excellent credit record is to pay the full balance owed every month, and to pay it on time. You’ll prove that you are responsible and you won’t have to pay high interest fees. To prevent yourself from accumulating debt, set a budget and don’t stray from it. You should only spend what you can comfortably pay for, without having to utilize your savings account.

Some individuals feel compelled to check their credit report and score on a monthly, weekly, or even daily basis. While it is a good idea to keep track of your report and score in case of any fraudulent activity, make sure you do it responsibly. Using one of the three major credit bureaus is the best option. Checking through a credit lender repeatedly can actually HURT your score. Avoid doing that unless you’re actually applying for credit.

A common mistake is to rely on credit cards, rather than savings, to make ends meet on a routine basis. This will take you down the path to heavy, long-term debt. The purpose of maintaining a savings account is to have something secure for the future, or safety net if you’re going through a rough patch.

Credit cards make shopping convenient no matter where you are. The internet has spawned a completely new global shopping market, making it easier than ever to find just about anything and have it sent directly to your home. Make sure the site you’re purchasing from is secure before using your card. This will help you avoid fraud, scams, and identity theft, which can cause permanent, irreparable damage to your credit.

Once you’ve learned how to use your credit card wisely, you’ll be able to maintain a good credit score and stay out of debt easily. Now you’re ready to get out there and start buying!