With all the information out there on credit cards these days and getting out of debt why is it that the average family in the U.S. has around $3,000 of credit card debt.  Is it because they are buying bigger things or is because they weren’t properly informed of all the extra things credit cards may come with.

Like most families we didn’t intend to pile up a lot of credit card debt it just happened over time gradually building payment by payment.  So in this post I decide to go over a few things beginners should know about credit cards especially beginners.

Before I start I should mention that knowing these tips could essentially save you thousands in interest payments alone so read on and leave a comment below.

1. Universal Default Clause.  knowing just this one tip could save you a ton.  Universal default is a clause that basically states that if you miss a payment the credit card company has the right to up your interest rate to the maximum if they want.  Not only can they do that but if you have a late payment on any other bill such as a utility bill, your car loan,  or any other type of regular bill or debt you have they can increase your interest rate.
2. Stay Away From Late Payments.  Making a late payment can ding you credit score very quickly.  It’s the quickest way for you to lose trust with other financial institutions.  But here’s the catch credit card companies have been very sneaky about sending you your statements at the last minute and in some cases a few days before they are due just so you will be late.  However the payment isn’t good from the date of your postmark.  It’s only on time once they receive the payment.  What gets me the most about this is it’s O.K. to postmark for your taxes but not for your credit card payments.
3. Remember The 33% Rule.  If you haven’t heard of this before it basically means that as long as you stay below 33% of your credit limit your credit will stay clean.  For example if you have a $3000 credit limit and you have a $1000 balance on the card at all times you’ll be safe.  However, if you continually have a balance greater than that month after month you will start to see a few issues show up on your credit score.
4. Stay Away From The Minimum payment Trap.  By paying the minimum payment on your cards you are in a sense prolonging the fact it will only take you more money to get debt free.  Though I do have one exception for this.  If you are running your own debt plan as I have shown in previous post then it is fine because you are doing what is called snowballing.  If you would like to learn more about this click here.
5. Watch Out For 0% Transfers While Charging Normal Rates On Everything You Buy.  This one doesn’t apply to every card but their are the select few you may see this on.  Typically what happens here is you may get a new credit card with a 0% transfer rate so you can cut your rate down for say 6 months so you don’t get hammered with the interest.  However, if you buy anything with that card you are going to sacked with interest payments and worst of all they may then add the interest to you current balance.
6. Be Careful About What You Buy.  This one also is just exclusive to just a few cards.  Some credit card companies are now getting picky about what you buy.  For example if you tend use your credit card at bars, nightclubs, massage parlors and a few other places some credit card companies may be reporting this against your credit.  However no credit card company has ever come forward and admitted this it has been known to happen.
7. Be Careful Of Double Cycle Billing.  How would you like to pay interest twice on your monthly credit card bills.  Again this is only subject to certain companies but can be a big cost to you.  Double cycle billing works like this, if you have a thousand dollar balance on your card and you pay off $500 of the bill you not only pay interest on the remaining $500 but you also will pay interest on the original $1000 on your bill but here’s the catch they are charging you interest on $1500 not just $1000. 
8. Beware Of The Overdraft Fees.  Today the average overdraft fee is around $35 not including the interest.  If you have the issue of using over the limit or think you may go over the limit beware.  This little pot hole in the road can cost you some series bucks not to mention a few dings in your credit history.
9. Accepting Credit Without Income.  This is a big one for the younger crowd especially college students.  The average college student these days has on average $6000 on credit cards before they graduate.  But the worse part is they have now way to pay off the debt other than making the minimum payment.  This would be like going to the bank to get a loan with out showing any proof of income.  Instead look to alternatives like debit cards so you can’t over spend your limit.
10. Be Careful Of High Credit Limits.  This can be a big trap from the beginning.  Unless you actually need the high credit for say running a business or have something that would be easier to buy with a credit card this would be fine, but if your an impulsive spender and can’t control your wallet you may want to call the credit card company and to have the credit limit lowered to something more suitable like $500. 

What’s Your Position?

Have you ever been caught in any of these situations or do you know of any other tips to pass along?  Leave a comment below and share your tips and stories.