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getting the benefits from credit cards and loans

By Lena / October 28, 2012

Getting The Benefits From Credit Cards And Loans

Both credit cards and personal loans can be extremely helpful to you, but they can also be very harmful if not handled the right way. You have to learn how to make the most out of them and use them to your benefit instead of your debt demise. Read on to find out helpful tips on how to make the most of your credit cards and any personal loans you undertake.

Reward cards give you extra perks and added savings to a credit vehicle you are already using in the first place. However, some people find themselves spending more on their rewards cards in order to get the rewards. You must find the balance, in which you reap the rewards of those types of cards, but do not let them hinder your financial situation at the same time. They are very helpful instruments, and the rewards are sometimes frequent flyer miles or cash back.

A good rule of thumb is to not borrow more than 30 percent of the available credit on your card. It is important not to max out the credit card because this shows that your budget is strained. This can significantly lower your credit score and keep you from getting other credit vehicles in the future.

Never use your credit card for cash advances. The interest rate immediately jumps up for those types of transactions, and you should only use them for purchases. You also have a grace period on those purchases, and you should always pay your balance off monthly if at all possible.

Never take out a payday loan because the interest rate on the loan is just astronomically high. You can spend years paying off a payday loan if you don’t watch out. They charge you so much interest that it is hard to even pay on the principal. Even if you pay off the loan right away, you owe a finance fee that is way more than it should be. Not only that, but payday loans don’t help your credit. Therefore, they are of no good service to you.

If you find that you have several loans and can benefit from consolidation, then you should check into consolidating your loans. This can lower the amount of interest charges you end up paying, and you can lock in a single low interest rate for your new consolidated loan.

Be on the lookout for scams, and always keep an eye out. Scammers are rather cunning, and they can reel you in faster than you would think. They are always inventing new ways to scam people and steal identities. Make sure you are aware of recent scams, and do not let yourself fall prey to one.

You do not have to take out a loan or get a credit card. Most people do, and most people use them incorrectly. The key is they are good building blocks if you use them wisely and are a good steward of your money. Remember these tips as you work on improving your credit history.

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