Learning how to properly use credit cards is often the difference between someone with good credit and someone with bad credit. Since credit cards are probably the most popular vehicle people use to drive themselves into the depths of credit despair, it is a great idea to set forth rules of engagement when it comes to your credit cards.

Rule one: Don’t purchase consumables with your credit card. Pay cash always.

This is a biggie, buying your morning coffee and bagel with your credit card ensures that you must use your card every single day. You then get into the habit of doing so. Not good. Pay cash like most people do when buying things you eat, drink, or smoke everyday. The credit card should only be used occasionally, any more than that and you wind up paying interest on what? A bagel. You would be the only one at work who pays $8.00 for a buttered bagel. Sounds stupid but it happens.

Rule two: If you don’t have the cash in your bank account to cover a purchase, YOU CAN’T AFFORD IT!

This is another big one. The only exception here is emergencies, and by emergencies I don’t mean that PlayStation 3 just released a collector’s edition of World of Warcraft that comes in a gold plated tin, and you just HAVE to charge it because you don’t get paid until next week. An emergency is having a flat tire on your only car, or the boiler goes kaput. If there weren’t credit cards, you wouldn’t be able to buy something if you didn’t have the money. That is the difference between society before and after consumer plastic. We were able to survive without credit cards for a long time. You should be able to do the same for non-emergency purchases. Don’t make it the norm to live on a borrowed dime, there is no faster way into the poor house.

Rule three: The minimum payment accomplishes NOTHING but putting more money into the pocket of the creditor.

Every time you make the minimum payment, the majority of your payment is likely to be pure interest. That means that only a small fraction of your payment actually goes towards lowering your principal balance. For example, if you make a $100.00 minimum payment on a high interest card, about $13.00 will be taken off your bill. The other $87.00 will be considered interest, or “The vig” in extortion terms. I say that because the majority of creditors are nothing more than mob loan sharks. Actually, worse, at least the mob is honest about what they will do to you if you don’t pay up. Pay as much as you possibly can every month, and if it truly is the minimum, than fine.

Rule four: If you can’t make your payment on time, call the creditor.

The absolute worst possible thing you can do is not pay and not call. This tells the creditor that you don’t take this debt seriously, and will likely wind up with them making a negative report to the credit agencies. That will directly affect your credit score in a  negative way. Call them, tell them you can’t pay right now and ask them for more time. You might get told absolutely not, but at least you made the effort to call them. This ways in your favor when they consider turning the account over to collections or not.

Those are a handful of guidelines that can greatly improve your credit card management. If you feel deep down that what you are doing is wrong, then it likely is. Treat your debts as a top priority and it will show, and the benefits will be many.

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