February 03, 2011

Pay Off Your Credit Card Balance Every Month

NEVER Carry a Credit Card Balance

Even though some people think it could help your credit rating, according to my view, carrying a credit card balance is NEVER a good idea.

In fact, if you use a credit card, you should adopt this three-part Basic Personal Finance Rule:

Avoid Fees and Protect your Credit Rating

Adopting the Credit Card Golden Rule will help you avoid unnecessary fees and preserve your credit history.

Not doing so will result in a lower credit score. In the long-run, bad credit scores equal higher interest fees, higher insurance premiums, difficulties getting loans and even getting a job.

The Cardinal Sin: Paying Late Fees

Interest charges are bad but late fees are even worse. Late fees get you nothing. At least, you can borrow money by paying interest fees.

So try to avoid paying high credit card interest charges but even more important, make sure you never pay late to simply avoid dumb late fees!

Use Better Borrowing Options

Everybody has better borrowing options than credit cards. For example, you will pay much lower interest on your line of credit.

So, explore every alternative before carrying a high-interest credit card balance.

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