Well Christmas has come and gone and we’ve all spent loads of money, but are you one of the many thousands of people who are worrying themselves sick about how they are going to pay their credit card bills.

To get yourself a good credit rating and avoid getting yourself into financial difficulties, you need to learn to use your credit card prudently and shrewdly.

Listed below are some points to remember abut credit cards and some information that hopefully will help you get your credit card bills under control.

Firstly, you must remember that credit card companies are out to make money.  You ever get something for nothing.  Remember each time you use your credit card you are literally borrowing money from your credit card company.  We all understand that credit cards are a handy and convenient way to buy things now and then and then pay for them later, but you must not forget that if you don’t pay off your balance each month, then you will have to pay a charge for the money you’ve ‘borrowed’!

Credit cards and debit cards should not be confused.  When you use your debit card the money is deducted directly from your savings/current account.  You do not have a credit facility with a debit card.  With credit cards some companies will set the minimum monthly payments at a low rate, sometimes less than 2%.  This could mean that it takes you 30 years plus to pay off what you actually owe if you only pay the minimum monthly payment.  The longer it takes you to pay off your balance the more money the credit card company makes.  The most important thing is not to spend more than you can afford in monthly repayments.

Each time you apply for a credit card the company will make enquiries into your credit history.  Your credit history contains reports of every company that has checked your credit rating.  If you have applied for a credit card and if you were turned down, it will have an adverse effect on your credit rating.  Also, obtaining a lot of credit cards can affect your ability to get other credit.  Companies will be suspicious about your ability to repay any money ‘borrowed’.

The biggest problem where credit cards are concerned is that we use our credit cards above and beyond our means of paying them back.  We probably all carry credit cards for different reasons, whether it be for emergencies, to keep a check on what we are spending or to avoid carrying cash around, we must avoid at all costs, charging more to our credit card than our income will allow us to repay.  The last thing you want or indeed need is to accumulate tons of debt and be unable to pay more than the minimum monthly payment, or even worse be unable to even meet the minimum monthly payment.  This will affect your credit rating. 

When you are looking to apply for a credit card, you should research all possibilities.  You should choose a credit card with no annual fee.  You should also take into consideration things like interest rate, ‘grace’ period and level of credit.  You must beware of companies who offer low introductory rates.  These are often valid only for a short time and after that they become much higher.  Remember that each time you use your credit card the issuing company are paid a percentage.  It is advisable to avoid credit cards that offer a high credit limit.  The higher your credit limit the more chance there is that you’ll be tempted to spend.  You should clear your outstanding balance before buying more goods.  As credit card companies charge for late payments you should ensure that your payment is made in plenty of time.  Late payment rates incurred will probably be at a much higher rate than normal.

So to sum up, you can maximise the benefits of using your credit card by ensuring that your payment is on time.  You clear your balance as quickly as possible, thus avoiding any unnecessary fees.  Choose your credit card company wisely, spend carefully and above all be self-disciplined.  Spend only what you can afford to repay from your monthly budget.