fabuLESS tip: How to use your credit cards RESPONSIBLY and STAY fabuLESS!

Credit, when used RESPONSIBLY, is quite fabuLESS– use your card when it benefits YOU (and NEVER carry a balance!)– when to consider using a credit card INSTEAD of cash/debit: rental cars (provides additional insurance & some states won’t allow you to rent a car without a credit card), for travel (some cards provide FREE checked luggage as a perk and/or travel insurance); for extended warranties and/or the ability to dispute a charge; at stores that provide discounts/perks for their cards (i.e.: Ann Taylor, Gap/ON/BR, Kohls, TCP, Target); to get cashback/accrue points or miles; to track your spending– there are MANY reasons to use credit RESPONSIBLY!

Also, having NO credit is often as bad as, or even WORSE, than having BAD credit! You do NOT have to run up debt to have a credit score, you simply have to manage credit RESPONSIBLY.  My philosophy is this– if you can’t trust yourself with credit cards, then don’t– but don’t ignore the fact that there are other reasons to have a high credit score (employment, renting, insurance, etc) and my issue with some personal finance gurus’ stances on credit scores (some personal finance experts don’t believe in using credit at ALL and consider the use of credit scores as silly and unnecessary, in fact some advocate having a credit score of ZERO– yikes!) is ignoring some basic truths about the world– namely, credit scores DO matter and credit cards do provide protections that debit cards and cash do not and can not. Also, I think that it’s shortsighted not to reap the rewards and benefits but if and ONLY if you stay AWAY from the pitfalls. But again, everyone has to make the decisions that make the most sense for THEM, I’m just sharing facts and information, that’s all :)

Sometimes what’s best for personal finance goals & what’s best for credit scores aren’t *exactly* the same: for personal finance reasons, ALWAYS pay down your highest interest credit card FIRST. For credit score reasons, pay down the card that’s closest (%-wise) to the credit limit. Here’s a tip: TRANSFER balances and/or NEGOTIATE lower interest rates & keep the debt to credit ratio on each card as LOW as possible!

Did you know that even if you pay your credit card in FULL every month you can still be HURTING your credit score if you’re close to maxing out the credit limit? So, what to do? You can use more than one card to ‘spread’ out the ‘debt’ (though you’re not carrying any debt!)- ask for a credit line increase- or do what I do: pay off the card the MOMENT you use it instead of at the end of the month- fabuLESS!

Just like you should never buy something BECAUSE it’s at a fabuLESS price (you should only buy what you’d normally buy WHEN it’s at a fabuLESS price) the SAME goes for credit cards– NEVER buy something just to earn points/miles/whatever, but why not get some additional perks when you’re ALREADY planning to buy something? THAT’S how you live fabuLESS!