Credit card companies can seem like these scary, all-powerful, monolithic entities. Maybe you’ve been burned by a late payment and seen your APR skyrocket. Or impulsively purchased an exorbitantly overpriced plane fare to Europe when you were in college…and you’re still paying for it. Whether you have that nagging debt or a spotless credit record, Ramit Sethi’s I Will Teach You To Be Rich, offers the “Six Commandments of Credit Cards” to help you take control—and advantage—of your finances.
1. Pay off your credit card regularly. The single most important thing you can do to improve your credit is to pay your bills on time.
2. Get all fees waived on your card. Call your credit card company using the phone number on the back of your card and ask if you are paying any fees, including annual fees or service charges.
3. Negotiate a lower APR. The average APR is 14 percent, which makes it extremely expensive if you carry a balance on your card. Call your credit card and ask them to lower your APR.
4. Keep your cards for a long time and keep them active. Lenders like to see a long history of credit, which means that the longer you hold an account, the more valuable it is for your credit score. Don’t get suckered in by introductory offers and low APRs. If you’re happy with your card, keep it.
5. Get more credit. (Warning! Do this only if you have no debt.) By getting more credit you can improve your credit utilization rate (how much you owe divided by your available credit), which represents 30 percent of your credit score. This tip is ONLY for people who have no credit card debt and pay their bills in full each month.
6. Use your rewards! Many credit cards offer rewards programs that give you cash back, airline tickets, and other benefits, but most people don’t take advantage of all the free stuff they can get. Call your credit cards and lenders and ask them what advantages you are eligible for.
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