by Matt B

You are pre-approved. Millions of these offers are extended to people every day. Most get them in the mail on a regular basis. Some choose to accept them without much thought, some review the offers and decide whether it is a good idea to accept. Some just throw them away without even opening them. These offers are nothing more than advertisement. They are sent to lure you. Most of these companies have reviewed your credit score and send the offers based solely on that while some are sending these offers “blind”, meaning they have not seen your credit information and are sending this offer to get you to apply for their product. Upon application, they will place you with a best fit offer based on your credit information.

Not all of these offers are bad. You may be looking for a new card. Maybe you have no other cards or are looking for a card with a good balance transfer offer to move to a lower interest rate. Remember, credit cards can be used as tools to improve your overall credit, so you must be aware of what is best for your situation.

Credit card users:

1)Pay off balances every statement.

The best way to use credit. Don’t use more than you can afford to pay off at the end of the statement period. This way, you aren’t paying to use the card. *If it is a reward card, they are actually paying you!!
2)Use the card to exercise benefits of the card.
There are thousands of reward cards available. Some offer cash back on purchases, airline miles, and discounts on many services. The list goes on and on. If you use a reward card, they can be very beneficial and worthwhile to use.
3)Review and correc
t credit reports from all 3 reporting agencies.
This tip, although not always easy, is probably most crucial. Many people do not even know how to go about this. is the ONLY resource to obtain credit reports absolutely free. It will not provide your credit score, but there are other ways to get that. See: CreditKarma for free credit score.

Credit card abusers:

1)Only pay minimum balance due.
Subsequently, credit card companies’ favorite customers. Abusers often have a large balance on their card, and only pay minimum balance due every statement. Essentially, you are paying interest only on a loan. The principal balance changes very little month by month and may take decades and tens of thousands of dollars in interest depending on the amount of credit extended to you.
2)Frequently pay late.
Believe it or not, credit card companies love these users too. Late fees and over limit fees are a great pad to their bottom line. In fact, if you are close to your limit, and incur a late fee, that fee can cause you to go over your credit limit thus causing another fee. Credit card companies love late payers.
3)Make large purchases on credit with intentions to pay it back slowly.
The biggest proponent of large purchases on credit comes from stores themselves. Many stores offer cards that can only be used at their business. These cards often carry a slightly higher interest rate than conventional credit cards and create huge profits for their respective franchises. In many cases, the allure for store cards is a discount on products bought with the card. This can be a benefit for smart credit users. All to often, abusers will make large purchases that they will pay far more for with interest over time.
4)Take cash advances.
The worst thing you can do with a credit card is take a cash advance. A cash advance is essentially a high-interest loan through your credit card. Usually a one-time fee will be assessed for a cash advance along with a much higher interest rate than your purchase rate. The most advantageous aspect of cash advances for credit card companies is that the cash advance is the last thing you will pay off on the card.

As you can see on this statement, the cash advance interest rate is 5 points higher than the purchase rate. Until the purchase balance is paid off, none of the cash advance balance will be paid down. This is completely legal. Somewhere in the many page, tiny print agreement with your creditor is a section about cash advances. This states the APR and fees for cash advances along with jargon illustrating that if cash advances are taken, they will be the last balance paid upon. This makes huge profits for the company.

If you are a user, good for you. Keep it up. I am not one who is against the use of credit cards. Responsibility is paramount. There are plenty of cards that will pay you to use them.

If you are an abuser, there are plenty of methods you can use to pay down your credit cards and teach yourself to use credit responsibly.


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