Having a good credit score is incredibly important if you want to get a credit card with a decent interest rate, qualify for a car loan, or qualify for a home mortgage. The first step to having a good credit score is to understand the three agencies that creditors report to: Equifax, TransUnion, and Experian.

It’s important to know how your credit report is going to be different on each of these agencies. They all feature slightly different information. Here is a general overview of each of the agencies.

Equifax

In an Equifax report, all accounts are summarized as being open or closed. This makes it a little easier to look over all of your open accounts to decide which ones you need to focus on to improve your credit score.

There is an 81-month credit history for each account on the report from Equifax. Some accounts may also have a statement that accompanies them, which says “no 81-month payment data available for this display.”

TransUnion

On the TransUnion report, a more detailed employment history is listed than on the other two reports. Every account is listed as either “satisfactory” or “unsatisfactory”, and there are color-coded boxes that are featured with every account to better visually describe your payment history.

So, for example, if there is a yellow box that says “30,” it means that you were 30 days late on a payment whereas a green box that says “OK” means that your payment is current. If a white box with an “X” is present, it simply means that there is unknown information associated with the account or payments.

Experian

There are some unique things featured on the Experian report that aren’t featured on the other two reports. For example, the report has a “balance history” section, which indicates what your credit/balance has been for the past decade throughout different time frames. Each account will also have “status details” that are listed, and these will indicate when the accounts will fall off your report. So if you had an account closed in April 2016, it will explain that this account will stay on your report until April 2026.

Some of your basic information is going to be listed on all three reports. For instance, your personal information like your name, known previous addresses, and date of birth is going to be listed. You will also see some sort of summary of all of your accounts on each report.

Once you have a better understanding of the three reports from the three different agencies, you are in a much better place to analyze your free credit report. Fortunately, there are websites like Credit Sesame where you are able to obtain a free copy of your credit report. Once you have a look at this, you will see how you could go about improving your credit. If your credit score has fallen, repairing it can be the best way to ensure that your financial future is secure.

Differences Between Equifax, TransUnion, and Experian is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

The offer can come innocently enough when you’re at the checkout counter at a department store: “Would you like to apply for our store credit card today? You get an automatic 20 percent discount off today’s purchase.”

Immediately, your answer should be “No.”

Without time to go over the written terms of the contract with a busy cashier, and not knowing how the store-branded card can affect your credit score, among other things, that discount of 20 percent or more doesn’t look so good.

Here are three things to consider before applying for a store credit card:

High interest rates

This should be your first concern because if you don’t pay the credit card bill in full by the due date, you’ll be charged interest that can be a lot higher than with a regular credit card. Why? There’s a higher risk for lenders offering cards to a range of customers who have a range of credit scores.

Store-branded cards have interest rates of around 23 percent. Credit cards from banks and credit card companies can range from 10 percent to 21 percent.

And just like any other credit card, a store-branded card has a penalty APR, or annual percentage rate, if you don’t make the minimum payment on time.

Effect on credit score

Department store credit cards have more lenient lending standards, making them easier for young adults with little or no credit history to be approved for.

Using store credit cards wisely can establish a good credit history. But opening too many accounts at one time can hurt a credit score through what are called hard inquiries. Having too many balances can also be a bad sign, showing the possibility of default.

The cards usually have low spending limits, creating high utilization ratios that show you’re using a high percentage of your available credit and are close to maxing out your credit cards.

Overspending with store credit card

Store credit cards are meant to bring customers back, and credit cards have been shown to get people to pay more for something than they would with cash. And because their credit cards are only accepted at their stores, retailers know you can only shop with it at one place.

Just like a sandwich shop gives you a free sandwich after you buy 10, a department store credit card may offer you exclusive discounts if you spend so much money a year with its credit card.

If you’re not already a loyal customer to the company offering you a 20 percent discount for signing up for its credit card, you may soon be if you accept the offer.

Watch Out for These 3 Problems if Cashier Offers You a Store Credit Card is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

With all the cashback and reward offers out there, you could make a good return on your spending by choosing the right credit cards. But if you aren’t careful, you could also become one of the many people dealing with credit card debt, and once you’re stuck with that, it can be tough to pay off.

To make credit cards work for you, here are a few helpful tips and tricks:

Maximize Your Signup Bonuses

The typical credit card rewards rate is 1 percent. That’s one percent cashback on every purchase, or 1 reward point/frequent flyer mile per dollar spent, which is generally considered to be worth about 1 cent.

Many cards have better rates, but even then, you’re probably looking at 2 to 3 percent. That’s a decent return, but it’s nothing huge.

The real way to get plenty of cashback or rewards is credit card signup bonuses, which can often be 50,000 points or more for spending a certain minimum amount within a specific timeframe after getting the card.

To maximize your credit card rewards, you need to apply for new cards periodically to get more of those big signup bonuses.

Pay Everything You Can with a Credit Card

Your credit card is most likely the only option you have to make a return on your spending, as you certainly don’t get that when you pay with cash or your debit card. So why not make the most of it? Put all the expenses you can on a credit card.

When you do this, you make sure you earn as many points as possible. This also helps you reach the minimum spending on any credit card signup bonuses you’re after. You can even combine your credit card with other types of financing to keep getting points. Let’s say you’ve gotten title loans in Tampa to pay pressing expenses. You can still pay those expenses using your credit card, and then pay your credit card bill with a title loan.

For the best results, see where your credit cards earn bonus points and match your spending accordingly. If you have a Chase Sapphire Reserve that earns 3 points per dollar spent on dining, put all your bar and restaurant tabs on that.

Never Pay a Cent of Interest

If you follow the two tips above, you’ll earn far more in cashback or rewards than most consumers. But to ensure that you’re actually making money from this, you need to avoid getting charged any interest.

Fortunately, there’s a simple way to avoid interest charges. You just need to pay whatever is listed on the statement balance every month. The current balance is also an option, but the statement balance is what’s important in terms of whether or not your card issuer charges you any interest.

None of the tricks above are that hard to implement. All you need to do is keep up with credit card news a bit to see what the best signup bonuses are. And, of course, stay disciplined financially to avoid interest charges. Don’t spend recklessly just because you have the credit for it. Make your credit card beneficial for you instead of for the card issuer.

Getting to Know the Credit Card Tips and Tricks is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Such businesses are difficult to find, so my iPhone is inside a small case that opens to hold only three cards: my driver’s license, a debit card and a credit card. No, it’s not a man purse. It’s the size of my phone, but about twice as thick. For me, it beats carrying around both a phone and a wallet.

But even with just one credit card on me, it’s tempting to leave it at home and only carry my phone with me.

When I go to a business with a mobile card reader, I’m looking for one that uses Bluetooth technology to connect my mobile phone to its credit card reader so that the credit card stored on my phone can be seamlessly and securely used.

I’m looking for Bluetooth for two reasons: So I don’t have to carry a physical credit card with me, and so I don’t have to use the chip in the card and spend an inordinate amount of time at the cashier.

There’s also a third reason, which I really did’t think about much until I went to Europe last summer for vacation: High merchant fees for using a credit card.

The mobile card reader from SumUp seems to solve all of these problems. Here’s how:

Low fees

Credit card fees usually aren’t passed directly to consumers, but any shopper knows that the fees merchants pay to accept credit cards are included in the cost of doing business and are ultimately included in the prices of its products and services.

I try not to use credit cards for small transactions, knowing that the business will pay a small fee for the convenience of letting me use a credit card there. It seems silly to use a credit card for a $5 purchase.

A low-cost swipe machine can cost a business from 3-4% per transaction. Some charge termination and paperwork fees. SumUp’s EMV card reader charges a 2.75% credit card processing fee on each transaction, and doesn’t have monthly costs or delivery fees.

While I don’t pay such fees directly as a consumer, they’re in the back of my mind when I visit a store, especially an independent one that may be a family’s sole income. This was especially apparent last summer when I went to Europe on vacation and found that I needed to use my credit card a lot more than I planned because getting cash from an ATM was more difficult than I thought it would be.

Whenever I’d pull out my credit card, especially at small businesses, I’d sometimes get a roll of the eyes from the business owner, who either didn’t accept credit cards or accepted them reluctantly. The credit card fees were a headache, I assumed. Instead, they preferred cash.

I want to earn credit card awards as much as the next guy, but inconveniencing small business owners shouldn’t be part of that computation.

No physical card needed

Whether on vacation or in my daily life, I like to travel light. A phone is almost a necessity throughout the day, but a wallet and credit cards aren’t because my phone can securely hold a digital version of my credit cards.

The mobile card readers from SumUp allows customers to swipe, use a chip or pay with their phone. Just tapping your phone to the SumUp card reader gets a transaction going.

Mobile payments are only increasing, so this seems like a natural fit for any business that wants to grow.

Security

The SumUp EMV card reader is also secure. It uses computer chip technology on Europay, Mastercard and Visa cards — called EMV cards for short — to protect against fraud.

Each card insertion generates a one-time code that’s then used to approve payment. U.S. merchants that use EMV card readers are in compliance with recent rules on credit card payment security, and aren’t subject to liability costs if they’re defrauded while using an EMV card reader.

Keep the line moving

This is a minor complaint, but many EMV card readers can clog up a line at the cashier. If you’ve used a chip in your credit card instead of swiping the card, then you’ve probably experienced this slowdown.

A good EMV terminal should be faster than using cash. SumUp’s EMV card reader is fast, and it’s also easy for a mobile business to use anywhere they can get a mobile phone signal. The reader fits into a pocket and is about half the size of a mobile phone.

A Mobile Card Reader That Makes Life Easier for Consumers is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

There are few quick shortcuts to improving a credit score, but there are some big moves that can raise it dramatically.

Here are some of the biggest moves you can make to improve your credit score:

Know your credit score

Start by checking your credit score at AnnualCreditReport.com for free. The three credit reporting companies must give you a free report once a year, so you can either get all three at once or spread them out by getting one every four months.

The score you receive represents your credit risk at a point and is meant to measure your future credit risk. Scores from the Fair Isaac Corporation, or FICO, are most widely used, with scores ranging from a low of 300 to a high of 850.

The higher the score you have, the more likely you are to be approved for credit and get the best loan rates for auto loans, home loan and credit cards, among other things.

Here’s a breakdown of what the scores generally mean:

• 781 and above: Excellent credit leading to lowest interest rates.
• 661-780: Very good with access to most lines of credit.
• 501-600: Fair with slightly higher interest rates.
• 500 or lower: Poor credit and difficulty getting credit.

Once you have your credit report in hand and know your credit score, you’ll know what you’re up against and can start working to improve it. Now comes the hard work.

Dispute errors

Your credit report is full of all kinds of useful information. It shows accounts you have open and closed, collections, tax liens, employer information, your name and address, among other things. It can also list a credit card account that doesn’t belong to you, meaning someone may have fraudulently taken out a credit card in your name.

You want to check the report for inaccuracies and then dispute them with the credit reporting companies so that the wrong information is removed from your credit file and your credit score is improved.

For example, a report may list a closed credit card with an unpaid balance, when you know you paid it off. A copy of your last credit card statement showing the card paid off and closed should solve this, and should be included with your dispute letter.

The Federal Trade Commission has a sample dispute letter for reporting errors on your credit report. The credit reporting companies have 30 days to investigate your query.

Pay bills on time to improve your credit score

Being on time, as your kindergarten teacher probably told you, is an important lesson that will serve you well in life. It’s important for a credit score.

Payment history accounts for 35 percent of FICO credit scores, and is the first thing any lender wants to know about you. If you’ve paid your credit accounts on time in the past, chances are you’ll continue to, the thinking goes.

A few late payments won’t kill your credit score, and having no late payments won’t lead to a perfect credit score.

But they’re the single biggest factor in a credit score, so not being late or missing a payment is important. A long history of making payments on time is also important.

FICO scores consider how late the payments were, how much was owed, how recently they occurred, and how many late payments there are.

Use your credit card less

This sounds like an obvious thing to do, and a difficult one, but paying off your credit cards each month and using less of the credit amount available to you is important. The amounts owed on accounts determines 30 percent of a credit score.

You’re not expected to have a zero balance on your credit cards, but should just use 10 percent of the credit amount you’re given to get the best credit score.

Using a high percentage of your available credit can indicate you’re overextended and are more likely to make late or missed payments.

This percentage is called a credit utilization ratio. It’s the percentage of your available credit you’re using on revolving accounts — meaning credit cards.

Here’s a simple example: If you have a credit card with a credit limit of $1,000 and you’ve charged $400 on it, you’re using 40 percent of your available credit and have a credit utilization ratio of 40 percent. To get down to 10 percent utilization, you’d need a balance of $100.

Even if you pay your credit card bills in full each month, you still may have a balance and a credit utilization ratio above 10 percent as you continue using a card.

The number of accounts you have is also a factor. Having a large number of accounts with amounts owed can indicate a higher risk of over-extension. If you do have a few credit cards, keep all of the balances low to help improve your credit score.

Open a credit card, or two

This sounds counterintuitive, but opening a new credit card account or two can help improve your credit utilization ratio. The ratio will drop by increasing your overall credit limit.

But doing this comes with a few caveats.

Your credit utilization ratio will only drop if you don’t use the credit cards or keep the balances below 10 percent of the limits.

If you already have a low credit score, getting approved for a new credit card may be difficult. And adding a new credit card to your wallet may not be a good idea if you have problems keeping a lid on spending or don’t pay your bills on time.

As detailed above, amounts owed equals about 30 percent of a credit score, so opening a new credit card can lower your utilization amount and make it look like you’re using less of your available credit. Just be sure to use it wisely.

New credit accounts for 10 percent of a credit score, so adding one new credit card to you credit profile won’t improve it much. But opening one or two new credit cards each year shouldn’t hurt it if used well.

Keep at it

Whatever steps you’re taking to improve your credit score, know that it’s a journey that can take years.

While the above steps can lead to relatively quick improvements in a credit score, they’re also things that should become habits if you want to keep your credit score high for years to come.

Checking for credit report errors, paying your bills on time and keeping balances low are some of the best ways to improve your credit score. They should help you gain access to better credit terms, eventually leading to lower interest rates and saving you money.

Biggest Moves to Make to Improve Your Credit Score is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

A credit score can be used in ways other than in determining what interest rate you’ll pay on a loan. It can also be used by employers, landlords and utility companies — with your permission — to determine if you should work, live or be allowed to sign up for electric service without a deposit.

Small credit score drop is fine

But not all of those look at your credit score as much as you might think. There are some times when it can be OK to let your credit score drop by a few points.

For example, if you don’t plan on applying for credit in the next six months or so because you’ve already got a car and house, then a small drop in your credit score shouldn’t hurt you. You still want to keep your credit in good standing, but there is some wiggle room.

Your credit history can be more important in non-lending situations than your credit score.

For example, an employer that pulls a curated version of your credit report may be more interested in verifying a work history and if you pay your bills on time than on if you have perfect credit.

A landlord requesting a credit score for a possible tenant may not be looking at a specific credit score but for red flags such as if they’re behind on any debts. One or two late payments can be enough of a warning that they may not pay their rent. A utility company may have the same reasoning.

How rewards cards affect credit

And here’s one bit of good news: Applying for credit cards just to get the rewards that they offer, including sign-up bonuses, shouldn’t hurt your credit score if you keep the cards to a minimum and pay them off in full each month. If you plan on getting a major loan within six months, then you may want to hold off of on the rewards cards.

To continue in maintenance mode with a credit score, start by checking your credit report three times a year for free at AnnualCreditReport.com. Look for errors, if fraudulent loans were taken out in your name, and if the payment history is accurate.

Clearing mistakes can take months, so checking your credit report every four months can help prevent you from scrambling if you do decide to get a loan or someone needs to look at your credit all of a sudden because you’ve found a new job or are moving.

Is it OK to Let Credit Score Slip a Little? is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

This resulted in families taking on more credit card debt to alleviate the financial stresses of the time. The average American family currently has over $15,000 in credit card debt.

Because credit cards operate on revolving credit, their interest rates are often above 20%. This can create a trap that is hard to escape; some borrowers are only able to pay off the interest on their balance. For this reason, EC Lending has begun to help their customers refinance this debt at significantly lower rates.

The idea began in 2014 in Escondido, California. The company’s founders realized that credit card debt was becoming an excessive problem in the credit industry and that many borrowers were extremely serious about paying it off — they just couldn’t due to interest rates. EC Lending, which started as a loan broker in the automobile industry, then made a definitive decision to tap into the market.

Success has been rampant so far. EC Lending LLC of San Diego, California has reported that the amount of clients that have come to them in search of refinance has way overshot their initial profitability projections. In addition, by analyzing a consumer’s credit report, EC Lending is able to target low risk borrowers who have clear sources of income. This reduces risk on the lending side as many refinancers are often considered risky borrowers. In order to provide rates that are competitive with industry leaders, EC Lending has had to invest serious time into selecting their initial batch of clients.

Despite the economy’s recent recovery, experts believe that credit card debt is now part of America’s mentality, and that balances as a whole will continue to rise. The reason behind this is that to spur investment into the economy the government has increased the money supply which has resulted in bank’s reducing the requirements for obtaining all forms of credit.

This means that much of the country is now seeing there debt rise rather than fall, despite positive economic signs. For this reason, firms like EC Lending are likely to experience continual growth into the future as consumers continue to spend more than they can afford despite increases in wages.

EC Lending LLC Tapping into America’s Credit Problem is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

A recent study by the Urban Institute found that using cash when a purchase is under $20 left the consumer with $104 less in revolving debt, on average. That dropped their credit card balances 2 percent below their baseline average.

For young people, the $20 cash rule led to more savings. People under 40 who were reminded “Don’t swipe the small stuff” and to use cash on purchases for less than $20 had $173 less in revolving debt.

Credit keeps charging

The group also send reminders to credit union members that “credit keeps charging” and that using a credit card adds about 20 percent to the total cost of something.

People who received that reminder didn’t significantly change the amount of their credit card debt, the survey found, but younger people did charge less. People under 40 who received the reminder about the cost going up by 20 percent with a credit card had $160 less in credit card debt.

A swipe is easy

Swiping a credit card can seem a lot easier and cheaper than using cash because you’re not parting with anything tangible. Seeing a $20 bill leave your wallet can have more of a feeling of spending money than using a plastic card on the same thing.

A $6 cup drink doesn’t look to bad when compared to a $5,000 spending limit on your credit card.

Having cash on hand is less likely to leave you making small impulse purchases, which is what most impulse purchases are. But those small costs add up.

If you don’t believe it, try seeing how many small purchases you make in a week with $20 in your pocket and how often you need to go to the bank to withdraw $20 more. Then only use a credit card the next week for small purchases.

If you’re noticing that you spend less with a tempting $20 bill on you, then you could be slowly solving a revolving debt problem that you may not have realized you had.

Want Less Debt? Don’t Swipe the Small Stuff is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Flying to Europe for the summer for free off credit card reward points sounds almost too good to be true.

Signing up for credit cards mainly for the bonus points that come with them is a money-saving method that has intrigued me for years. I haven’t done it, however, because I don’t want to spend the effort keeping track of six or so credit cards. My main concern is much more dire: Will it hurt my credit score?

I’ve written about credit cards and credit card rewards for a few websites, and this is a topic I’ve touched on for a few of them after talking to credit experts and people who make collecting credit card bonus points a hobby. The consensus was that it doesn’t, with a few caveats.

Instead of relying on credit card points experts who keep a spreadsheet of their cards, I found Matt Schulz, a senior industry analyst for CreditCards.com, to talk to about chasing credit card rewards.

Chasing credit card rewards to Europe

I’m in no position to recommend specific credit cards for sign-up bonus points, but there are two that have caught my eye because they’re for airlines I either enjoy flying (Hawaiian Airlines) or use often because it has cheap fares (Southwest Airlines).

Hawaiian offers 35,000 bonus miles with its credit card after spending $1,000 in the first three months. It also offers a one-time 50 percent discount on a roundtrip ticket for a companion who goes to Hawaii with you, provided you buy a ticket with money and not reward points.

The bonus miles would almost pay for one round-trip flight. My wife’s flight would be half off if bought with a full-fare ticket for our daughter. Our three round-trip flights would end up being half off with the bonus and discounts, making the deal seem good enough to warrant getting the card.

Chase offers a Southwest Airlines Visa card with 40,000 bonus points after spending $1,000 in three months. Business owners can earn 50,000 points by spending $2,000 in the first three months.

My wife and I could fly across the country and back on Southwest for less than 50,000 points, giving us another vacation option with our credit card rewards.

But how do I get to Europe? American Airlines has a rewards card with a 50,000-point sign-up bonus after spending $3,000 in three months. According to the airline’s reward chart, it takes 30,000 points to fly one-way to Europe.

After spending some cash on the AA card, we’d have enough points for one free round-trip ticket to Europe.

My sign-up bonus choices come down to:

• Two free roundtrip flights across the United States.
• One and a half free roundtrip flights from California to Hawaii.
• One roundtrip flight to Europe after spending a few thousand dollars extra on the credit card.

Managing three or more credit cards

Each card carries a fee of about $95 per year, though it can be waived during the first year. I deplore paying annual fees to get credit card rewards, but I think it’s a worthwhile expense for the bonus points.

I’ve always thought that if I ever do chase credit card rewards points, I’d get rid of the credit cards before the one-year anniversary so I wouldn’t have to pay the annual fee. But that may be difficult to do if I’m chasing three vacations — Hawaii, New York and Europe — and won’t likely take them all in the same year.

However that works, I also need to be aware of spending only what we can afford to pay back in full each month when the credit card bills arrive. Along with annual fees on credit cards, I also don’t like paying interest or late fees on credit cards.

Chasing rewards points for the three cards listed above at the same time requires spending $6,000 in three months. That’s $2,000 per month, which we should be able to pay back and can use to pay our regular expenses.

How many cards is too much?

The first question I had for Schulz when we sat down for an interview was how many cards I could apply for without hurting my credit score? I have an excellent credit score and I’ve worked a long time to get it there, and I don’t want to hurt it by opening and closing them too quickly just so I can get a free (or partially free) vacation.

Schulz recommended the 5/24 rule. Applying for five credit cards within 24 months shouldn’t hurt a credit score, he said. Applying for that many cards at the same time is a red flag to creditors and could be a sign that you’re in financial trouble and trying to cover it with credit cards.

“As long as you pay your bills on time and keep your balance low, it’s not going to hurt your credit,” Schulz says.

With that advice in mind, applying for three credit cards a few months apart from each other shouldn’t hurt my credit score. And paying each balance off in full each month and not being late with any payments will help keep my credit in top shape while helping me earn credit card rewards.

When to close cards?

If opening three credit cards at the same time within 24 months just for the bonus rewards won’t hurt my credit score, then my next question is: Will closing the accounts hurt my credit?

Length of credit history accounts for 15 percent of a credit score, according to FICO, one of the major credit agencies. Along with the oldest, newest and average account age, a credit report also looks at how long it has been since you used certain accounts.

After getting new credit cards for the sign-up bonuses, Schulz recommends keeping your oldest credit card open as a way to improve your credit score. But if you’re paying an annual fee and aren’t using the card, then it’s worth getting rid of.

While having too many credit cards open can make you look like a credit risk, closing an unused account a year or so later won’t affect your credit score as much as you might think.  The information from a closed account stays on your credit report for 10 years, Schulz says. So if you didn’t use that card wisely, it could hurt you for 10 years.

When to jump on credit card rewards offer?

Credit card bonus offers come and go, and you’ll likely see more of them in your mailbox if you’ve recently applied for a credit card. The offers can be enticing, and the best ones may not be available for long.

A few years ago Hawaiian Airlines was giving 75,000 bonus points — or more than double what it normally offers new customers — to new accounts spending $5,000 in six months. I was going to apply for the card so I could get the bonus points, but I waited about two months before deciding to apply. I was too late and the offer expired.

What held me up? The 50 percent off companion fare had to be used within 13 months of opening the card, and I wanted to wait two months to start that clock because I didn’t think we’d take a trip to Hawaii that soon.

My delay cost us about two free round-trip flights to Hawaii. Waah.

Will Chasing Credit Card Rewards Hurt My Credit Score? is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Plastic money, free money, emergency fund – are all terms that people to describe credit cards.

Credit as a system has been around for quite a while. It’s thought that credit really began with general stores giving farmers equipment and supplies on credit until they could be paid after harvest. In 1950s though is when the first credit card was created. Credit cards didn’t really become popular though until the 1980s.

There are good ways and bad ways to use credit and credit  cards, and a lot of people mistakenly treat credit cards as free money. This is how some consumers end up in thousands of dollars of credit card debt. Some families live off of credit cards to get by, while others spend extravagantly whether they can afford it or not. If you are thinking about getting your first credit card, here are some things to think about before you sign the dotted line.

Good Uses of Credit vs. Bad Uses of Credit

There are some good reasons to have a credit card, like helping you build your credit score. If you want to purchase a house or something else significant, you need to have a decent credit score in order to qualify for a loan.

You can establish one through student loans or utilities, but a line of revolving credit, like a credit card, will help keep your score high. The higher your credit score, the better chance you have at securing a loan with a low interest rate.

A bad use of credit is having several lines of credit open with none of them being paid off. This could lower your score and lessen the chance you’ll have a getting a loan. Even if you do qualify for a loan, you may have to pay a higher interest rate.

Credit Card Limits

Credit cards come with spending limits. Just because you get a card with a $5,000 limit, does not mean that you can or should spend $5,000. The suggested rate is under 25% of your limit. If your card gets a balance over that amount, your credit score can be affected, especially if you don’t pay your card off in full every month.

Credit Card Fees

Credit cards sometimes come with yearly maintenance fees. These may not seem like much, but they can add up over time. It’s best to avoid credit cards with this fee if you can. There may also be fees associated with balance transfers and cash advances. You can also be charged a late fee if you make a late payment, or a fee if you go over your credit limit. Make sure you read all the terms and conditions before getting your first credit card.

Interest Rates

There are numerous types of credit cards out there with various rates and fees. The interest rate is called an APR or annual percentage rate. This can be fixed or variable and is usually tied to the balance on the card. APR is applied when your balance isn’t paid in full and there is often a grace period where you can make payments or pay it all off, without the interest getting applied. You can qualify for a lower APR if you have excellent credit, but if this is your first credit card, it will likely have a high APR as you are an unproven borrower.

Reward Programs

Lots of credit cards come with rewards programs. You may see them on television commercials or get offers for them in the mail. Most rewards programs offer points for each dollar you spend on your card. If used correctly, this can be beneficial in getting free or lower cost plane tickets, extra cash in your account, or points to redeem at retail stores or restaurants. But, you have to be careful to not get in to debt just to earn these rewards.

Your Credit Goals

Keep in mind your first credit card should be used as a way to build credit, not as an unlimited source of money. You still have to pay that bill. If you treat it as your emergency fund, treat it with extreme respect. A shopping spree is not an emergency. It’s better to work towards an emergency fund in your savings, and have your credit card as an accessory.

Misuse of credit cards can lead to a slippery slope of horrible credit and crushing debt. A single credit card is all you really need to have. Before you apply for your first credit card, do your homework. Take time to research which card type would be best for you. Be resilient in paying your bill and watching your balance. Credit cards can be a great financial accessory, but only if managed correctly.

Are you considering getting your first credit card?

6 Things to Consider Before Getting Your First Credit Card is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.