People often vilify credit cards because they have such high interest rates. Consumers who
carry their balances from month to month rather than paying off their balance at the end of each
month often end up getting in trouble financially.
If you’re interested in how you can use credit cards responsibly, continue reading to find out
more.

Credit Card APR

Compared to other forms of credit, credit cards have higher interest rates, regardless of if you
have a good credit score or not. Getting into credit card debt can be a nightmare because of
this, as these high interest rates create a much deeper hole for consumers to climb out of.
Interest continues to add to the overall debt a consumer is in.
One of the best ways to prevent this from happening is to pay off the balance at the end of each
month. In doing so, you won’t even have to pay interest on your purchases. In turn, the APR on
the credit card becomes irrelevant. In truth, there is no reason to pick a card based on APR if
you are planning on paying it off near the end of each month.

How To Be Responsible With Credit Cards

Always Pay Your Cards Off In Full

The golden rule of using a credit card is to pay your card off in full each month; in doing so, your
credit card essentially becomes free. However, the main exception is if you have an annual fee
that you must pay with your credit card. For many consumers, the benefits and rewards offered
by having a credit card outweigh the annual fee.
Keep Your Balance-To-Limit Ratio Low

Keeping your balance-to-limit ratio low is one of the best ways to increase your credit score. The
balance-to-limit ratio is often referred to as the credit utilization ratio. When your balance gets
close to your credit limit, you earn fewer and fewer points toward your credit score.
The same goes for both VantageScore and FICO credit scoring models.
Of course, this doesn’t mean you need to avoid making large purchases with your credit card.
However, you may want to avoid making a habit out of it, as it may come back to haunt you
when you apply for a loan. The last thing you want to do is end up with an incredibly high
interest rate, which could cost you thousands of dollars later down the line.

Final Thoughts

Credit cards can feel incredibly intimidating, especially for those who are new to the game of
credit or are not sure how to properly use them. However, credit cards, alongside authorized
user tradelines, can provide consumers with major credit benefits if used the right way.
If you’re looking to learn more about how tradelines can potentially help you reach your credit
goals, make sure to get in touch with us here at Personal Tradelines to learn more. We look
forward to hearing from you.