How To Use Your Credit Card
For Ultimate Financial Advantage
by Alain Diza
Using a credit card wisely is an important step in building a great credit
rating. If you're trying to re-build your credit or if you're young and just
starting out, pay close attention the next time you receive a new card offer in
the mail or online. When you're trying to build a positive credit history for
yourself, using the right credit card makes sense. Making small purchases and
then making your payments on time each month is a simple, reliable way to build
an outstanding credit report.
WHAT TO LOOK FOR ON A CREDIT CARD APPLICATION
If you receive a credit card application that appears to offer a low monthly
interest rate, don't make a decision until you turn it over and closely examine
the Disclosure Box. In it you'll find a more important measure of credit terms -
the Annual Percentage Rate, or APR. By federal law, the Disclosure Box will also
tell you whether or not the card has what is called a grace period - a number of
days, usually 25, until your purchase starts to accrue finance charges. If a
card has a reasonable grace period and you pay off your balance at the end of
each billing cycle, you won't have to pay finance charges. It isn't difficult to
find credit cards that offer these grace periods, so if the Disclosure Box
doesn't declare one then throw the application in the trash and look for a
better offer.
If you don't have any credit history at all, a credit card company won't want to
give you a very high credit limit, but that's probably best when you're just
starting out. You don't want to be tempted to go into serious debt with your
very first credit card.
HOW TO CALCULATE YOUR MONTHLY FINANCE CHARGES
Ideally you want to pay off your balance each month to avoid paying any finance
charges, but when that isn't possible it's important to know the actual cost of
the items you purchase. The annual percentage rate, divided by 12 months, gives
you the periodic rate that will be applied to your outstanding balance each
month. You can estimate what your monthly finance charge will be by multiplying
the periodic rate times the outstanding balance. It may sound complicated at
first, but taking the time to learn this simple equation can make a big
difference in how you use your credit card.
When you're able to see how much you actually spend on an item that you don't
pay off at the end of the month, it might help you to resist the temptation to
over-use your card. An item that you want to buy might be on sale at the time
you purchase it, but if you don't pay off your balance at the end of the month
then those finance charges can dramatically increase the actual amount you'll
end up paying.
USE YOUR CREDIT CARD AS THE STRONG FINANCIAL TOOL
Credit cards are only one of the tools available to help you build a positive
credit history. Making on-time payments for other forms of credit, such as rent
and utilities, are also important. Depending on your situation, within 1-2 years
your credit rating will be improved enough that you no longer need to use your
card for new purchases to maintain your good credit. Use these tools wisely, and
they'll help build your financial future like no other!
Alain Diza makes it easy to acquire a large selection of premier credit cards
designed specifically for your needs. Access his "insiders-only" selection
of credit cards and financial resources today at:
http://www.onlinecreditcardsdirectory.com