Best Ways to Use Credit Cards

If you're like most American consumers, you depend on the convenience and versatility of the credit cards you carry. From shopping online, to buying airline tickets and guaranteeing hotel reservations, to renting cars, credit cards simplify our lives.

Unfortunately, the flip side of that picture is out of control credit card debt and the devastating consequences it can have on your monthly budget, credit score, and peace of mind. But there are smart ways to manage your credit cards. If you use your cards in the right way and for the right reasons, they will enhance your financial picture instead of becoming a liability.

Smart ways to use credit cards

By using your cards wisely, as a means to reach a determined end, you'll be way ahead of the credit card game. Here are a few tips:

• Use your credit cards to build your credit score
• If you're just starting out and trying to build a good credit history; or if you've had credit problems in the past and are determined to re-establish your credit score, smart credit card use is a good way to accomplish your goal. By keeping your balance at just one-third to one-half of your credit limit and making sure your payments are always on time, you'll establish a very good credit record with the three credit reporting bureaus.
• Keep track of monthly expenses by using your credit card
• By using a credit card with a grace period for all your monthly expenses ñ and then paying your balance in full each month, your card statement will provide a detailed record of how much you spent and where you spent it. At a glance, you'll be able to ascertain if you have stayed within your budget and, if not, where you need to cut back. And because you'll be paying your card in full each month, you won't pay any interest.
• Use your credit card when making expensive purchases
• When planning on making a large purchase you can put in on a credit card and you'll be protected if the item is defective or damaged. In accordance with federal law, if you have made a genuine effort to resolve the issue with the merchant you purchased the item from, but cannot come to an agreement, your credit card company will assess the situation and, if they find that you are in the right, they'll remove the amount of the purchase from your account.