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5 Rules of Credit Card Use

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Building good credit can be a powerful tool to help you throughout your life. Used correctly, credit cards can build a favorable credit score and help in emergency situations. Used incorrectly, credit cards can plummet your financial life into disaster. For this reason, it is helpful to have guidelines that all consumers should follow. Here are some tips on how to use a credit card wisely.

1. Understand the power of credit.

Credit can often be taken for granted until it is no longer accessible. Good credit has the power to help you buy your next car or home at a low interest rate, while bad credit can make it almost impossible to buy anything. Those with poor credit who still manage to get approved for a loan will pay higher interest rates. Before signing up for that first credit card, be sure you are clear on how the choices you make using credit can affect your life.

[More from Manilla.com: Credit Cards: Where to Spend and Where Not to Spend]

2. Choose wisely.

With so many different credit cards to choose from, be sure to review the choices thoroughly before applying. Do not choose a credit card based only on an offer received in the mail, research online to find out which one best suits your specific needs. Compare interest rates, annual fees, and rewards before choosing a card. Credit card users who only need a card for emergencies may prefer a card without annual fees regardless of the interest rate, while others who use their card frequently to gain rewards, will probably need to use a card with fees.

3. Know the rules.

Read up on your new credit card, including all of the fine print. Be aware of late fees, grace periods, cash advance fees, and annual fees. Many new credit cards have introductory offers that give a great low interest rate, but make sure you are well aware of when this rate changes and what the new rate will be.

[More from Manilla.com: What to Do About Old Credit Cards with Bad Rewards]

4. Have a plan.

New credit users may charge items without really taking into consideration when they will have the money to pay the charges off. Before using that card, be sure you have a plan for repayment, know what the interest rate is, and understand how much you are paying in the end. Credit card users should use credit only when they have a plan for paying it back within a reasonable amount of time. Some users may decide to only charge amounts that can be paid back at the end of the month without interest. Other users may choose not to use the credit card at all, except for emergency situations. Consumers may also decide to use credit to purchase items outside their budget with a plan for paying it back over the next six months. The important part is that a plan of some sort is in place. Charging purchases randomly without much thought can result in a big bill at the end of the month with no plan for how or when it will be paid back.

[More from Manilla.com: 4 Things You Should Never Do with Your Credit Cards]

5. Monitor your accounts.

Stay on top of credit card accounts by monitoring them frequently for new charges and changes to the account. Set up email reminders for due dates to be sure it does not slip your mind. Also, pay attention to any emails from the company that you may brush off as junk mail. These may include important changes to your account that you need to be aware of. Monitor your balance as compared to the credit limit. Accounts with balances too near the limit will lower your credit score.

Alaina began researching work-at-home jobs 13 years ago when she decided to leave the workforce to stay home after the birth of her first child. Through years of research and first-hand experience, Alaina has learned how to sort the legitimate jobs from the scams. She now enjoys sharing legitimate work-at-home jobs with Moms via her blog Telecommuting Mommies. She also opens up her personal life as a homeschooling, blogging, work-at-home Mom of four at The Maestro Mom. Follow her on Twitter at TelecommuterMom.

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