As if keeping track of your finances when it comes to paying bills, saving for emergencies, let alone saving for retirement is not hard enough, credit should not be overlooked, and is just as important, and in most cases, goes hand in hand. Your credit is the primary factor that lenders can look at to show if you are worthy of granting credit to, so it is important to carry nothing but the smartest of credit behaviors.
Be Aware of Your Credit Card’s APR
It may seem like common sense to know what your credit card’s interest rate is, but how many cards do you have open? Do you know exactly what each one is? More power to you if you do, but if you have had these accounts open for years, chances are you do not know, so before you go charging up a balance that you will not be able to pay in full by the due date, take a look to see which has the lowest APR out of the group, and those that are high, might want to consider cutting up.
Pay the Full Statement Balance at the Due Date
Speaking of APR and not being able to pay in full by the due date, that is when you become the credit card company’s favorite customer and start paying them interest each month until the balance is paid off. If you are lucky to have a reduced interest for a promo rate that will help save, but for others that are carrying over 15% APR, depending on the balance, most of the monthly payment could be going towards interest. It is in your best financial interest to pay the full balance by the due date to avoid wasting any more money than you have to on interest.
You are Liable as a Co-Signer
Before you sign for say, a car loan for a family member that may have had trouble in the past, just beware that although the loan is going in their name, you are just as liable being the co-signer. Before you go and sign your life away too, make sure you can trust the transaction so you do not get screwed in the process.
Monitor Your Credit Report
With the amount of fraud that can occur these days from identity theft, it is important to monitor your credit report at the minimum, every year, so that you can ensure all of the information is accurate to avoid any damage. Keep in mind that it usually takes a month or two to catch up to the credit report, so that if you recently paid off a debt, it may still show for now.
Leave the Zero Balance Accounts Open
It might sound crazy to leave a credit account open after you have worked so hard to finally pay off the balance, but you should actually cut up the card and keep the account open instead, as closing will reduce your total available credit and could actually lower your credit score.