For those of you who are trying to re-establish your credit health or for readers who are serious about getting their financial life in order, here are a couple of things to remember regarding responsible credit card use.
1. Pay in full. Use your cards if you need to, but use them sparingly.Try not to carry a balance from month-to-month. If you can’t pay your balance in full at the end of the month, then you are spending beyond your means.
2. Keep your balance low. If your balance exceeds more than 30% of your available credit, it may have negative consequences on your FICO score. At the very least, work aggressively to lower your balance to below 30% of your total available credit.
3. Stay away from store credit cards. If you already have credit cards, then you should think very carefully about opening store credit. These cards have insanely high interest rates. Some store cards have 20% or 30% interest! Whoa. (The Financial Gurus do suggest opening a store credit card as a tool to rebuild your credit.) Bottom line: Unless you absolutely need to, avoid these cards at all cost. This type of debt is the worst debt to carry.