Using Credit Cards-The Right Way

Credit cards seem to have gotten a bad rap. After all, they help us with all sorts of things-things like paying for a tow when you get a flat tire in the desert, or when you feel like splurging just this once on something really great. And they are increasingly helpful during international travel. None of that trying to find a place to cash traveler´s cheques or someplace to exchange your currency. Plus, if someone mugs you, you can just cancel the car, and you aren´t liable for a dime. Well, a dime past $50 anyway.

True, credit card companies do charge obscene interest rates, and they are a little too easy to get. It´s almost impossible to resist them. But when you do have a credit card, the ultimate responsibility on how you use it is no one´s but yours. So, here are some time-tested tips on how to use your credit card the right way-in such a manner that will help your credit score and allow you to get some of things that you want.

Try to pay off the balance each month. That way you won´t have as high an interest charge. And you can keep your card freed up for emergencies.

Only buy what you can pay off in no more than two or three months. Seriously look at your finances. If the deal is too good to pass up, make sure that it is something that you could afford after setting aside some money right now. If it´s an emergency, use the card, of course, but try to pay off what you put on ASAP.

Make your payments on time and always pay at least the minimum balance. This will keep your credit score in good shape. I try to pay my bill as soon as I get it, so that I don´t have to try to remember to pay it later. But if that´s not your style, remember to give it a week to get there with snail mail, and that most online payments take two or three business days to process.

Get a card with no annual fee. Annual fees can be a bummer. Choose a card that doesn´t charge them. There are plenty such cards available.

Choose good rewards programs. Cash back programs aren´t actually as valuable as things like airline miles and merchandise rewards. The amount of cash you get back usually doesn´t even come close to covering the interest rate you pay. 5% cash back on a credit card that charges 12% annual interest? Doesn´t add up, unless you never carry a balance. I love my Capital One No Hassle Miles card, and my Upromise card from Citibank helps me set aside money for my son´s college education.

Using your credit card right takes financial discipline and sometimes denial. But in the end, if you develop good credit card habits, you can reap the rewards without paying big-time.