Get Your Credit Card to Work for You

When using a credit card, it can feel you aren’t using real money, and as a result you might spend more than you intended to. So, some people opt out of using credit cards altogether. However, the more important thing is to stay in control of your spending. Distinguish between needs and wants and never spend more than you earn. This way, you would never run out of money, and be able to save some and invest some.

If you will only use your credit cards to buy what you need most of the time and occasionally buy a Starbucks coffee, you should be fine. Just remember to pay in full every month. This way, you don’t lose out on the interests. I don’t know about you, but my credit card charges 21% on the interest! The market returns an average of just 10% a year.

If you’re afraid you’ll miss the payment to your credit card, you can set up an auto-payment to ensure your bill is paid automatically from your chequing account.

Using credit cards help in building your credit history. If you have a good solid history, it’ll be easier and may get better rates when you do need to get a loan (perhaps a mortgage?). You shouldn’t apply for tonnes of credit cards either. Only apply one when you need one.

Factors which Influence your Credit Score

  • payment history: 35%
  • amount of outstanding debt: 30%
  • length of credit history: 15%
  • new credit: 10%
  • types of credit used: 10%

Credit Score Rating Scale

300-559 560-659 660-724 745-759 760-900
Poor Fair Good Very good Excellent

Reference: local metro paper – 2013 issue

Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.

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