If you've followed the news, you'll know that the credit card industry is in a state of turmoil nowadays. Defaults are up, debts are not falling and the credit card bill just got passed. The credit card industry, in a preemptive attempt to stem their foreseen profit losses are raising interest rates and cutting credit. You'd think that keeping your credit score good and having zero debt would save you from these. You'd be wrong.
Still, the whole doom and gloom credit scenario does not mean that you should just stay home and not spend on anything, even the necessities. There is still some good things left, credit-wise and, as long as you are smart and careful, you can make the best out of them. Try out these tips to see how you can do that.
Pay Off Your Debts
It may seem common sense to you but this is actually what started this whole credit card problem in the first place. People were charging stuff they did not pay for immediately, or could not. It also follows that, whatever you charge on your credit card, make sure you can pay it off when the monthly bill comes. Also, be careful of the “minimum amount due”. It is a clever ploy which does not pay off your debts but only the interests.
Maximize Those 0% rates
If you just got a card with a 0% introductory offer, maximize its use but be sure you are able to pay off the monthly bills. It is very important that you always pay off your monthly bills because these 0% interest rate offers will usually jump to astronomical rates the moment you miss one payment. Don't count on automatic payments too much, either. If you want to use automatic payments, make sure that your bill is paid off well before the due date.
Be Careful Of Your Credit Limits
Credit limits used to be a big thing way back when. Nowadays, you can charge beyond your credit limits with ease. Ostensibly, credit card companies allow this to save you from getting humiliated when your credit card is denied at the counter. However, the penalty fee that you will be paying if you go over your credit limits would make you prefer getting shamed instead. Credit card companies are known to charge high penalty fees for over the limit purchases. With the credit crunch on, that's going to get higher.
Risk Based Pricing
If you are applying for a credit card or a loan because you like the interest rates that they are advertising, be careful. That may not be the rates that you will get. Credit companies call it risk based pricing. Basically, they adjust their interest rates based on how “risky” a borrower you are.