Learn to Use Credit Responsibly

Many first time credit users see the low monthly minimum payment and assume they can pretty much shop to their heart's content because they can afford the minimum. This is a very dangerous slope to be going down. Once you start to slide, the harder it is to stop or even slow down--you start to accelerate faster and faster into debt.

The first thing to understand is that the credit companies are in the business of making money. To do this, they need to collect interest and services fees. If you pay your balance off each month, the credit card company doesn't make a dime off of you. This is the situation you want to be in--using their money interest free.

However, most of us have times when we have to carry a balance. When that's the case, here are some tips to use credit to your advantage:

* Apply for a 0% intro credit card that will allow you to transfer your balance. Prepare to pay it off before the introductory period ends.

* Pay off as much as possible and as soon as possible. Never pay just the minimum payment!

* Always make your payments five to seven business days before the due date to insure that you don't get charged late payment fees.

* Put your purchasing on hold when you're carrying a balance. Don't start the slide into ongoing debt by continuing to add to the balance.

* Inspect your monthly statement thoroughly to be sure there are no unauthorized charges or other inaccuracies.

* Avoid spending near your credit limit. You take the chance of going over and being charged astronomical overdraft fees. The down side to being charged overdraft or late fees is that your next required payment will include these fees along with your normal minimum payment and may stretch your budget beyond its limit.

One way to manage your spending is by taking advantage of online banking. You can see your account activity on a daily basis and even arrange to make electronic payments over the Internet. Some people find it helpful to use a computer program to keep track of their spending. There are a wide assortment to choose from including Quicken® and Microsoft Money®.

If you do get into financial difficulties and forget to make a payment, immediately contact the creditor and let them know your payment will be sent immediately. If you act fast enough, they may not report the infraction to the credit agencies.

And last but not least, read the entire credit agreement and especially the boring fine print. This is where you'll find the fees for overdraft and late fees.