Credit Stories: Saving Your Credit. One Story at a Time.

Three Easy Steps to Get Credit Cards to Hate You

Credit cards have caused a lot of financial heart-aches in this country, and if you’ve recently paid off your balances in full you might be tempted to chop up those cards for good. In fact, most blogs, books and magazines recommend that you do—I’m here to say it’s time to fight back. Using your credit card responsibly is the ultimate way to get back at your credit card. Here are three easy ways to get credit cards to hate you.

An Important Disclaimer: This advice is not for everyone. You should only use this advice if you’re comfortbale with your credit card debt level, are fully aware of your incoming cash flow and follow a strict monthly budget. As always, it’s important to consult an accountant or budget out your financial situation before making any financial decisions.

1. Use Your Card For Nearly All Your Monthly Purchases

Admit it, you think I’m insane to suggest this. But the truth is hundreds of thousands of debt-free consumers do this every month. The trick is knowing what you can afford and NOT buying anything you don’t need or haven’t expensed out.

Your monthly cable bill, the gas to heat your home and your allotted monthly budget for groceries should all go on your credit card. These are expenses you know about, they are expenses you’ve planned for and one way or another you’re going to pay for them. Taking out cash, writing a check, or using your debit card are all great options because they are using money you already have. However, if you are responsible with your financial forecast and always know how much money you have and do not over-extend yourself, there is little reason not to put these purchases on your rewards card.

This even applies to luxury purchases like that new iPod Touch you just “have to own”. If you have slotted out $299 in your monthly entertainment budget, then this type of purchase should go on your credit card. The reasons are multi-fold:

• In the case of bills and groceries, you are earning rewards for the everyday purchases you would be making anyway. Airfare, hotels, free trips, savings accounts and cash back are just some of the things many credit cards offer.
• For bigger, luxury purchases like the iPod, most credit cards, like American Express, offer warranty coverage for any items purchased on the card that the store you bought it from refuses to cover.
• If you follow this step in conjunction with step #2, you’ll build a stronger credit score

2. Pay Off Your Monthly Purchases in Full

Everything you put on the card for that month should be paid off, in full, before the die date. No minimum payments, no “well, I could just pay half” - every purchase, paid off. Otherwise this plan just doesn’t work. If you earn 5% cashback on all purchases you make, it doesn’t make any sense to pay 15% interest on the amount of the purchase you don’t feel like paying this month. Be a dead-beat to the credit industry, pay off your purchases in full

3. Carry a Small, Manageable Balance on Your Card

Did you know if you pay off your entire credit card balance in full, that card my no longer apply to the calculation of your credit score? By carrying a small balance on your card each month you do pay a little in interest charges, but you keep your available credit ratio high and allow your credit score to grow. Use the credit card that caused you so much pain, to help rebuild your credit score and get you a better interest rate on a loan for your hosue or next car.

As always, these tips aren’t for everyone. And regardless of who you are, or what you want to do with your credit cards please remember to pay your card on time each month.

Tags Associated With This Story

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor.

---

Two Comments

September 14, 2008

June 11, 2008

---

Post a Comment

Your name:

Comment: