Strategic Use of Credit Cards

I have have several credit cards and use them regularly.  Here are my do's and don'ts of using credit cards.

Do's

• Use the credit card as a substitute for cash available to spend.  Charge only what you can afford to pay with cash, i.e. pay off each  month.
• Pay off the credit card balance before the due date to avoid late fee and interest charges, which can be very high. 
• Favor credit cards that don't charge an annual fee.   If an annual fee is charged, select cards where the annual benefits (e.g. annual free hotel room voucher) is greater than the fee.
• Choose credit cards based on benefits such as cash back, reward points, benefits such as trip insurance.
• Use credit cards to build credit score, which lowers insurance rates and interest for car and mortgage payments.
• Check the statement at least every month to ensure no errors or mistakes.  

Don'ts

• Don't use a credit card if one does not have enough funds to pay off the charges by the due date.
• Don't use a credit card if the merchant charges a convenience or surcharge fee.   Pay with cash or check instead.
• Don't use a credit card if the merchant gives a discount for cash or check. Pay with cash or check instead.
• Don't miss the due date or only pay the minimum amount.  Interest charges will accrue.

Additional recommendations:

• Create an online account, which allows checking the account more than once a month to confirm purchase and refund amounts.
• Use bank bill paying services, which is usually free, to receive bills electronically, which is faster than U.S. mail,  and pay electronically which is faster and saves postage charges.
• Pay off balances weekly prior to receiving the monthly bill. This makes the charges feel more like using cash. 

For more on Strategies and Plans, check back every Monday  for a new segment.

This is not financial, spending, credit score nor credit card advice. Please consult a professional advisor.

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