Use It or Lose It:
The best way to have good credit is for the person to use their existing credit wisely. The key is to USE IT and then pay the balance off based on the terms of that credit purchase. Having a credit card and never using it does nothing to build a good credit report. Using (misusing) a credit card and not meeting the credit terms is the fastest way to ruin a credit report.
Keep in mind that the type of "charge" can affect the terms of that individual transaction. A charge of a merchandise item or service generally has a grace period. A cash advance generally does not have a grace period. Paying off the cash advance may require that the entire outstanding balance be paid. That means payments made go to the merchandise or service charge before being applied to the "Cash Advance" .... Read and understand your SDS!!!
Save Money and Build Credit:
Not all Credit Cards are created equal. Some of the different types are listed below. Card Companies will generally offer many specials during a year that can be used to expand services and make shopping more simple and more rewarding. Bank Gift Cards are a new way to give gifts that can be used for any type of purchase.
0% Interest and No Annual Card Fee:
With any large bank and good credit that is possible. First you may actually get that offer. The length of time that your interest rate will remain 0% is clearly stated in the SDS. Up to a year is possible. Keep in mind any good credit card has those terms .... Simple .... pay your outstanding balance every month during the grace period.
Reward Cards:
When you have established "good credit" your bank or another card service may offer you a "Rewards Card." These generally have a percentage or points value that is based on using the card to make purchases. If you charge $1,500.00 per billing period (and pay it off during the grace period) you will have earned 18,000 points during that year. depending on the type of card those points can be used for travel (airline miles) or purchases or discounts toward a new car. The key is Simple ... paying the balance in full, each month, during the grace period!!!
In some cases these points can be piggybacked. As this is written you could use a United Rewards MasterCard to purchase your groceries at Safeway and earn Safeway United Airlines miles that would ad onto the miles building up on the United MasterCard Miles. If you fly for business of course you would use the United MasterCard to fund your tickets. This would mean that you have two or more streams feeding your United Mileage Fund. These could be used to offset next years vacation costs.
Smart Credit Buys:
When is it ok to use the credit card for a short-term loan. When it makes good "cent$". Savings on "some" payments. The best idea would be to finance it from a savings account. If your car insurance company gives a substantial discount for a yearly payment and you can pay the credit balance before the interest eats up the savings. This option is a second choice to a planned for use of savings monies.
Safety and Convenience:
Credit Cards are also a safety factor when shopping or traveling. Giving up a wallet full of credit cards means some frustration and time to cancel the cards - but no loss of real dollars in a robbery, loss or by a pickpocket. Credit Cards are accepted almost everywhere and are accepted over checks (travelers or otherwise) by all participating merchants. Peace-of-mind when on vacation - rather than carrying cash or travelers checks. Most major credit cards can be replaced within 48 hours following a loss.
Keeping a list of cards and customer service phone numbers in a separate safe place, online access information or an 800 number central service to work with you following a loss, changes the process from a crisis to a nuisance.
