Credit Cards are one of the most convenient ways to complete payments and to maintain control of the finances. There are many advantages and disadvantages of using credit cards that should be taken into account.

Should you use credit cards? Although credit cards are a useful tool that can be used with convenience, it is important to know how to use the credit card wisely when it comes to maintaining a good history with the credit card company. Unfortunately, credit cards do not come with instruction manuals and therefore many people find themselves facing credit card debt because of these facts.

Advantages

While using a credit card you can take advantage of rewards programs such as rewards points, cash back or airline travel miles that can help you to make the most of the money that you are spending. The card holder receives a certain amount of rewards for the money that is spent on the card, usually per dollar.

Credit cards allow you to make purchases through a variety of mediums, including the internet and over the telephone, even buying something from an infomercial that you viewed on the television. There are not many other payment methods that are as flexible.

If the credit card purchases are repaid within the grace period of a credit card (which often lasts twenty one to twenty eight days) than the purchase can be paid without accumulating any interest on the credit card.

Credit cards can allow you to budget. For example, if you choose to spend no more than one thousand dollars per month on your variable expenses the consumer can do so with the use of a credit card and once you have reached the spending limit it is time to stop spending.

Disadvantages

Credit card payments can easily become overwhelming when you are carrying a balance and are close to the credit limits of the credit card. If you are unable to control the spending than credit cards may not be the best payment options for you.

Credit cards are one of the most expensive financial services and can come with annual fees, high interest rates and over-limit and missed payment fees. These fees are charged to the balance of the credit card and can cause the balance of the credit card to quickly increase.

Credit cards can lead to spending without thinking and therefore can lead to debt as you do not often think about what is being placed on the credit card until you have to pay the credit card bill at the end of each month or receive the credit card statement in the mail.

Credit cards allow people to live outside of their means and accumulate debt as they are often used to cover expenses that the consumer is unable to afford. More than eighty percent of households are living outside of their means through the use of credit cards. This is a hard habit to break once you become accustomed to living a certain lifestyle of debt, while living outside of your means.

As you are most likely aware, the credit score is one of the most important numbers in your financial history. Once the credit score has been scarred with negative entries, it can be difficult to get the credit score back up to par and the process does not happen overnight. Once the credit score has been damaged it can be rejuvenated by taking measures to increase the score  but how do you maintain the score once it has been increased enough to guarantee the approval from creditors?

Here are some ways that you can maintain the credit score once it has been established:

1. Ensure that all bills are paid on time. The majority of your monthly payments are recorded and reported to the credit reporting agency. These payments are than tracked and can contribute to the 35% of the credit score that is used to calculate the entire credit score. This history is going to contribute to the score for as long as these accounts are open and therefore it is essential that positive history be created.

2. Avoid any defaulted accounts that are going to collections. Collections accounts are one of the fastest ways to decrease the credit rating and should therefore be avoided. Defaulting on payments should be avoided and the consumer should have a system that enables them to create an organized system to ensure that all monthly obligations are met on time.

3. Decrease your debt. The less debt that the consumer has, the higher the credit rating is going to be. Thirty percent of the credit rating is based on the amounts of debt that have been accumulated and have yet to be repaid. Those consumers that carry debt from month to month should examine this when creating a debt repayment plan. The quicker that the debt is removed from the credit rating, the quicker the consumer can maintain a higher score. Debt should be kept under 25-30% of the entire credit limit for the optimal results on the credit rating.

4. Keep an eye on your credit report. Ordering a copy of the credit report once every six months, or at least every year enables the consumer to avoid any mistakes hurting the credit rating. The report contains valuable information which should be monitored. There are many companies that offer credit report monitoring, for a low price. Taking advantage of these companies could save you valuable points that a mistake on the credit report could cost you.

5. Use your credit regularly. The more that you use credit, albeit wisely, the higher the credit score could potentially be. Be sure to remain active in all of your credit accounts to make the most of your credit rating and enable you to be approved for the credit that you apply for.