credit cards

Getting the most from credit cards

Love 'em or hate 'em, credit cards are a vital part of building solid credit. Laden with fees and accompanied by a sometimes frightening interest rate, credit cards can do far more damage to your credit score than good if used incorrectly. Here's how to make credit cards work for you.

Keep the debt low

The key to using credit cards to improve your credit score is keeping your debt levels low. That means limiting the total amount of your monthly purchases to 30 percent of your total credit limit. Keeping your debt levels in check accounts for 30 percent of your total credit score, so it's imperative to charge wisely and pay off your debts quickly.

Use secured cards

If you think you're in danger of going over the 30 percent limit or you just need to build credit fast, consider getting a secured card. Secured cards allow consumers to place a minimal amount of cash on the card upfront -- usually around $300. The card builds credit and won't let you overspend.

Pay on time

Miss a payment and it could cost you a higher mortgage rate when you apply for a loan to buy a house. Accounting for 35 percent of your credit score, your payment history keeps careful record of any late or missed payments as well as delinquencies. To take full advantage of your credit cards, consumers absolutely must make minimum payments on time each month. For those who need a little help, check out the guide to sidestepping late fees.

Keep the oldest

If your credit card debt has gotten out of control, ditch your accounts starting with the most recently opened card first. Since 15 percent of your score is determined by how long you've had credit, hanging on to your oldest card can go a long way in boosting your credit score. Here are a few tips for canceling credit cards you don't need.

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Product Rate Change Last week
Balance Transfer Cards 15.77%  0.06 15.71%
Cash Back Cards 16.48%  0.07 16.41%
Low Interest Cards 10.96%  0.10 10.86%
 
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