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Manage Credit Card Use

Techniques to Manage and Maximize Your Credit Card
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Manage Credit Card Use:

Quick Note

How you manage your credit cards is a key measurement that credit reporting agencies use when quantifying the credit rating of an applicant

Card holders who pay their card balances on time, at the required amount, will receive a favorable credit rating that translates into lower interest rates on mortgages and consumer loans.

Card holders who are late in paying their credit cards payments, often not paying the required amount as due, will receive a less-than-favorable credit rating that translates into rejected applications or higher interest rates for mortgages and consumer loans.


Review techniques for managing credit card payments

review our discussion for managing loan debt. It provides excellent techniques for payment and debt management: view techniques


We have two credit card management programs for review:

  1. Program A: for card holders who control their credit card use and payoff credit card balances in full each month.

  2. Program B: for card holders who carry credit card debt and pay only the minimum balance each month.

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Manage Credit Card Use:

Program A: Maximize Credit Card Benefits

These steps are for card holders who have the discipline to control credit card purchases.

Your objective under this program is to build a usage pattern that strengthens your credit rating and builds credit card benefits.


Step 1:

First, you will treat your credit card like cash, deducting from your money account the purchases you make with your card.

You can either deduct the amount by making an entry in your checking register, or using your Personal Financial Management Software (PFM) such as Quicken® or MS Money®

Basic rules for this card management program:
— keep good accounting
— record every transaction
— deduct money from your account for each purchase


Step 2:

Pay the entire balance each month. Never carry a credit card balance. The money to pay the credit card balance should be available from the money that has been deducted from your money account.


Step 3:

Limit your credit cards to 2-3 cards maximum. Select your cards with the following features:

  • no annual fee
  • 25-day grace period
  • rebate incentive or other incentive program
  • VISA, MasterCard
  • single-cycle billing

view what's new in rebate credit cards


Step 4:

Note that on average, credit card users spend about 10-12% more on items than buyers who pay with cash. That is why you should establish a monthly budget to curb your spending:

see managing a budget

Use your credit card for all budgeted essentials such as groceries, utilities, rent, etc.

Get rewarded for your use: download on rebate card benefits page


Step 5:

Understand the benefits.

  • strengthen your credit by paying large balances each month
  • again 25-days use of your money that can be earning interest
  • earn rebate benefits such as airline miles, auto points, etc.


Step 6:

Make a quarterly assessment.

If you find yourself spending beyond your budget (based on the ease of credit card use), you may need to switch to pre-paid cards or cash to curb your spending.

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Manage Credit Card Use:

Program B: Keeping Card Debt in Control

Program B: Managing Credit Card Debt

These steps are for card holders who lack discipline to control credit card use and who have incurred credit card debt.


Step 1:

List all of your current credit cards. Note the fees that you pay each month just having these cards. The goal is to rid yourself of this obligation.


Step 2

Select two cards from your list. Select the card that offers the best benefits:

  • no annual fee
  • 25-day grace period
  • low interest
  • VISA, MasterCard
  • single-cycle billing

If none of your current credit cards fit these benefits, find a credit card that does:

view our credit card index


Step 3:

Take a pair of scissors and cut all of your cards in half (except for the two cards you selected). Store the pieces in a jar as a reminder of your credit management program. Tuck the two remaining cards away for emergency use only.


Step 4:

Enroll into a pre-paid credit card program. Pre-paid cards work exactly like credit cards but function as a cash card. You load to the card the amount you need and use the card like a regular credit card to make purchases, arrange reservations, etc.

The advantage of pre-paid's is that you limit "instant gratification" since the amount you spend is set by the amount you budget and load to the card.

View how pre-paid cards can be used to control debt


Step 5:

Establish a family budget. Part of your budget will include a debt repayment plan.

See personal budgeting


Step 6:

You will now use your pre-paid card for your everyday expenses. If you don't have enough cash loaded to the card, adjust your monthly budget accordingly.


Step 7:

As you pay off each credit card balance that is remaining on the credit cards that you ripped up, call the creditor and request that they close your account.

Note: it is important that you close your account to remove the credit card from your credit report.

Throw away any new credit card offers that come in the mail. Hang up on telesales representatives hawking credit cards programs. Refuse to enter into any financing agreement with a furniture or home improvement retailer.


Step 8:

After about 12-18 months using PRE-PAID CREDIT ONLY, you can now jump to Program A above for maximizing your credit card benefits.


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