The Smart Way to Manage Your Credit Cards

by : Shirley Bullington

Undoubtedly there are distinct advantages to having a credit card, provided of course you know how to use one to your benefit. However, since an estimated six out of every 10 people in the United States alone are seriously in debt largely in part to misusing credit cards, it's apparent that many people are completely unaware of how to manage their finances, and how bad credit can adversely affect most every aspect of life.

Needless to say, prevention is the best means of defense when it comes to avoiding the pitfalls of credit card debt. But today, the rules of the credit card industry have changed considerably over the last few decades, so much so that most people have no trouble being accepted for a line of credit. While to a point, this definitely can be a positive thing, although as most of us can attest to, it's rather easy to fall into the trap of overspending by using credit cards unwisely.

Setting a Budget

Setting a realistic budget, and then following through with it is always the first step toward successfully managing debt. Although it may seem simplistic, actually writing down each and every expense gives you a visual example as to what your financial picture really looks like. So many of us don't realize how much the little things add up, buying lunch instead of bringing it from home, stopping for coffee before work, eating take-out food because it's quicker, but if you make a note of each time you spend money, regardless of the amount, you'll soon see how much you're wasting, and realize how your money could be better spent.

Simply put, if after doing your budget and keeping track of your finances you still find yourself using your credit card to pay for the every day necessities of life, this should be a clear indication that you're living beyond your means.

Find the Right Card

Shopping for the right card is more than worth the time it takes to do so. With all of the different cards, offers, and incentives available, it's often difficult to know which is best. Finding the right card for you will depend on your circumstances and what you plan on using the card for.

Ideally, the card with the lowest interest rate coupled with the lowest fees would be the wisest option, but those aren't the only details you should be aware of. Make it a point to read all of the fine print so there will be no unpleasant surprises when the bill arrives.

Be Diligent

Being diligent about paying your credit cards on time and keeping your spending under control are imperative, not only for your long term credit history in the future, but also for your financial picture today. If possible, pay more than the minimum amount due, and be religious about paying on time each and every month. Always account for processing time by the credit card company, as well as the time it will take to travel through the mail.

Online bill paying is an excellent option for avoiding late or over-the-limit fees, and some companies also offer automatic bill payments, where the minimum payment due will be deducted from your bank account at the same time each month. This is a rather convenient option, but it's important to ensure you'll have the funds to cover the payment on the due date to avoid hefty fees from both the credit card company and your bank.