Credit Card Smarts

How to Wisely Use Your Credit Cards

Nowadays, numerous people have credit cards. There are just so many different credit cards. Some credit card companies offer very low introductory rates, and others offer enticing reward programs. Learning how to wisely use your credit cards and avoiding financial disasters is one of the most important issues for all credit card users. In myFICO.com's article, "Average Credit Statistics," it states, "...Today's consumer has a total of 13 credit obligations on record at a credit bureau. These include credit cards and installment loans. ...Of these 13 credit obligations, 9 are likely to be credit cards and 4 are likely to be installment loans."

When you use your credit cards wisely, there could be a multitude of benefits for you. For example, you don't have to carry cash with you when you go shopping. You only have to make one payment, before each month's due date. On the other hand, the use of credit cards might also bring chaos and wide despair. It is extremely easy to overspend and purchase extra objects that are not necessary. You could make late payments or only pay the minimum due each month. You would then, however, have to carry large debts on your credit cards.

For example, you have a $1,000 credit card balance and you make the minimum payment of $25 each month with no more extra purchases. If the credit card company charges you an interest rate of 14%, it would take 123 months of payment plus a total of $667 accumulated interest to pay off this balance.