As consumers we use credit cards for any number of things. We break it out at the movies, the shoe store and the restaurant down the street. It?s convenient and often we don?t think about what is actually happening.
For example, when you charge a $15.00 pizza on your card that is maxed out to the limit and you are in the habit of only paying the minimum amount on the payments, that $15.00 ends up costing you substantially more than just 15 bucks in the long run. Substantially more.
And now it is even worse, because the credit card companies are raising rates and dropping limits like crazy right now before the CARD gets implemented in February 2010.
Some of the best advice for credit cards is to ignore the minimum payment and start paying it off. At the minimum payment you are essentially just paying the interest and ignoring the principal, thereby guaranteeing that you stay in debt. Make a higher payment and a larger portion of your payment will go towards the principal, which will pay down the debt and eventually you will pay of the entire debt.
One of the best techniques to improve your credit is to pay attention to your debt ratios or the amount of debt you have compared to the credit limit that has been set. For the highest credit scores, try to keep your debt at 30% or less of the limit that has been established.