Have you heard of charge cards? If you live in the United States, chances are that you have. As a matter of fact, the average American uses credit cards on a daily basis. However, improper use of charge card accounts is one of the leading causes of financial hardship that Americans face. With that said, I believe that it is unfortunate that proper use of charge cards is not a class that is taught to consumers in school. None the less, I have compiled a list of tips to assist consumers when it comes to using credit card accounts properly.

Tip #1: Do not overspend: The first mistake often made by Americans when it comes to using credit card accounts is overspending. When Americans face financial hardship, one of the first things that they will do is spend more than 50% of their credit limit on their credit card accounts. In doing so, these consumers tend to drag themselves deeper and deeper into debt. The credit limit offered by lenders is the maximum amount of cash that the lender feels the consumer will be able to pay back based on average calculations. However, this is not always the case. several consumers are given charge card spending limits that are way to high for their financial situation. With that said, it is a best practice for people to keep their charge card balance low enough that they feel they will be able to pay the debt off within 3 months if needed. However, even if Americans feel as though they can pay off their entire spending limit, they should only spend up to 50% of their credit card account spending limit to protect their credit ratings.

Tip #2: Make early payments: Another common mistake made by Americans when using charge cards is allowing their payments to come in late. Although, a great deal of people feel as though they pay their charge cards on time, they are still slapped with late fees. This is because credit card payments take time to process. To ensure that their credit card account payments are processed in time, it is important that Americans try to make their payments 2 weeks in advance. This also allows people to avoid late fees, harmed credit and showing any signs of financial hardship.

Tip #3: Don’t send minimum payments: The final common credit card mistake that we will talk about today is sending minimum payments. Credit card minimum payments are just that, they are the minimum amount of cash that the lender is willing to accept as a payment on a charge card. This is not the maximum amount of money Americans can pay. As a matter of fact, by paying minimum payments, people show signs of financial hardship. Also, minimum payments are designed to keep consumers in debt for a long time and cause consumers to pay maximum amounts of interest. With that said, to avoid much of the interest that would be charged over the life of credit card account debt and showing signs of financial hardship that may harm FICO ratings, Americans should always try to double their charge card account minimum payments.

It is my hope that these tips help Americans to use charge cards to build and maintain great FICO ratings while avoiding many of the fees associated with charge card accounts. It is important that Americans remember that credit card accounts are a financial tool. Improper use of credit cards can lead to severe financial hardship including bankruptcy. Adversely, proper use of charge card accounts can lead to financial strength and great credit ratings. With that said, it is always advised that Americans use credit cards properly!

This article was written by Joshua Rodriguez and is brought to you by:
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