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Is There A Smart Way to Use Credit Cards?

Recently Bankrate.com just finished up a 12 part series on financial literacy. The last of the series is covering the smart way to use credit cards. The four points that were covered in the news article were:

1. Build a good credit rating
2. Protect your big purchases
3. Make online shopping safer
4. Use card as a low interest rate loan

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While all four points are great ones, they hardly covered the surface on what we call the “smart” way to use credit cards. Using your credit cards wisely also involves not over spending and paying the balance on your bill every month.

Credit cards are wonderful things when they are used and treated with respect, rather than abused. Know what you are charging, and how much you have all ready charged for the month. If you cannot afford to pay the balance in full every month, you are over spending and living above your means. Many credit cards offer rewards, and those that have them are often trying to reap the rewards from the cards, so they use them on everyday purchases, rather than paying with available cash. That is great also, but just be sure that you keep a close eye on what you are spending and allow yourself so much per month on your credit card to spend. Doing so will prevent over spending, and not being able to pay your balance monthly.

Why make sure your credit card balance is paid monthly? When you pay off your credit card balance each month, you will not be faced with outrageous interest payments. Those would be interest payments, are more money you can have in your pocket. Why pay them when it is not necessary? It is like giving your money away.

So, remember the four points of the smart way to use credit cards, and also remember that you should watch how much you spend to not over spend, and be sure that you can pay your credit card balance in full each month. Keep that extra money in your wallet rather than building up interest charges in your cards each month.

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