Managing Credit

Whether or not you have debt, it’s still important to manage your credit. If you have debt, you certainly don’t want any more, and if you are debt-free, you definitely want to remain that way if at all possible. Back in the day it was simple to manage your credit. There were no such things as credit cards—the proprietor of the town store knew who you were and gave you credit off of your good name. Today, your name won’t get you credit, but it will get you a credit card with a credit limit. The temptation always exists to buy on your credit card and pay later—after your paycheck, at the end of the month, whenever. Don’t fall into the plastic trap!

Tips for managing your credit:

• Have ONE card. I repeat: have one card. Having more than one card can lead to purchases you won’t remember when your bill comes, or to spending too much money or trying to hide purchases. Having a second credit card that you don’t use to build your credit is a myth. If a card sits unused for too long, sometimes credit card companies will cancel it. This isn’t good for your credit, the same as not paying bills on time isn’t good for your credit.
  
• Pay off each month. Strive to pay off the full amount each month. If you can’t, pay off as much as you can, then spend less the next month so you can get caught up and pay month by month, instead of letting interest and unpaid bills pile up each month.
  
• Read the fine print. Don’t get scammed into something that seems like a good deal with low interest rates but after the first few months turns into high interest rates and other charges. Credit card companies are not necessarily your friend—don’t fall into the trap of believing that they are.
  
• Pay ON TIME. Don’t let late fees get you, because they can cripple your payments and finances.
  
• Avoid cash advances. Payday lenders prey on people who have no other options—if you have another option, do not do a cash advance. Interest rates on cash advances are often ridiculous because the people who need them need money right now so badly that they will take anything. Then, when your paycheck comes, you lose a significant chunk of change in interest payments.
  
• Watch limits. Don’t go over your spending limit. Period.
  
• Review your statements. Make sure someone else isn’t using your card without your knowledge, even a partner or child. Make sure you know where your money is going.
  

The bottom line: responsible behavior is the key to having a credit card. Don’t be afraid, but be aware of what’s out there so you can make informed decisions regarding your credit and spending habits.