As published by the American Society of Administrative Professionals at http://www.asaporg.com (member only site)
Credit cards: A blessing or a curse? Well…it depends (on how you use your credit cards). When you use these 5 steps to develop positive credit card habits, your credit cards can provide the opportunity to build strong credit and better track your spending.
Knowledge is Power– Understand the terms and conditions of your credit cards
Be proactive when it comes to understanding the terms and conditions of your credit cards as it can keep you from paying late fees or finance charges along the way and paying more than necessary. Some basic terms and conditions to understand would be: the interest rate; the rates/fees for cash advances; the billing cycle and when payments are due; and how and when finance charges or late fees are assessed and how much they will cost.
Live Within Your Means – Understand your cash inflow and cash outflow
Good credit card habits start when you use the cards as tools to help facilitate easier purchasing (i.e. via the internet) or easier tracking of what you may usually use cash for, and not as a means to allow you to buy things that you can’t afford (i.e. immediately pay for). The best way to develop this habit is to understand how much money you earn and how much money it takes to run your household every month. By understanding your cash flow, you will be able to avoid the “buy now, worry later” thoughts when purchasing items with your credit cards. There is peace of mind in the clarity and security that when you buy something, you will be able to pay for the item when the bill arrives.
Plan Ahead – Decide how you want to use your credit cards in advance
Take some time to inventory each of your credit cards and to decide for what purpose you will use each card – perhaps one card will be for monthly expenses (i.e. gas, groceries, personal care), and you’ll use another card for larger purchases. Planning how to use and how to spend on your credit cards will help you to keep tabs on your balances, and maximize the reward programs available (see point 5 for more on reward programs).
Take Control – Regularly review your credit card statements
Whether it’s a regular review of your online statement or when the bill comes in at the end of the month, reviewing your statements is a very important part of having credit card peace of mind. By reviewing your statements regularly, you’ll be able to catch any errors in charges, understand if you’ve had any fees assessed that you should ask to have waived (i.e. late charges or finance charges), and assess whether your credit card charges for the month were higher or lower than planned.
Rate Your Benefits – Get yourself the best card for your personal situation
There are thousands of different credit card offerings available, and it is important to get cards that work most effectively for you. Whether you want travel reward points or cash back, ensure that the interest rate is as low as you can negotiate it, and the rewards are relevant to your preferences and generously awarded. Some good sites to check out to compare credit card offers are www.creditcards.com and www.creditcardconnection.org.
Learn more on taking charge of your credit cards with Day 6 of our CD program Invest in Yourself: The 7-Day System to Take Control of Your Money—here’s the link: www.OwnYourMoneyStore.com. By creating these 5 new credit card habits above, credit cards can be useful and helpful tools in your financial life!