7 Credit Tips to Live By

Smart Spenders always that credit – any type of credit – is a loan. It’s real money that you’re expected to repay.

Smart Spenders start small with one card that has a low credit limit. They use that card responsibly and make sure they can manage the debt before they being to consider applying for more credit.

Smart Spenders study credit card agreements and closely read the fine print on inserts that are enclosed with monthly bills. This is important because card issuers can change terms with 15 days’ notice and these inserts may explain changing rates or fees.

Smart Spenders know that only meeting the minimum required payments is a trap! If you pay off a $1,000 debt at an 18% APR using only minimum payments it will take 8 years – yes, EIGHT YEARS – to repay. And the total interest charged will be nearly equal to the original amount, so it almost doubles the cost.

Smart Spenders know one slip up can create a negative mark on your credit report that can stick around for seven years. And if you make two of these mistakes your interest rate can escalate to the maximum until you make six consecutive payments on time.

Smart Spenders follow their budget diligently and keep track of exactly how much they’re paying towards their credit cards. They keep non-mortgage debt payments at less than 15% of their net monthly income. So if a Smart Spender takes home $4,000 per month they spend no more than $600 on debt payments, not including mortgages and auto payments.

Smart Spenders talk to their creditors and lenders whenever the need arises. Always notify issuers promptly when you move. And if you can’t make a payment you call them before you’re late, because Smart Spenders know creditors want your business for life. So they may be willing to make special arrangements that won’t leave a negative mark on your credit reports.

Smart Spenders take note of the first sign of debt trouble. So if they see they’re doing something like covering budget gaps with credit cards or using one credit card to pay another they take action. They find out how to get control of their finances and explore debt consolidation, low-interest lending options and credit counseling. They stop charging at the first sign of trouble. They put credit cards on lockdown until debt problems are taken care of and stability is achieved.