6 tips for better credit card management

Responsibly managing your credit card use is important.

Having the independence that comes with your own credit card is a wonderful feeling. You can go where you want, when you want and always have a viable payment method.

As with any freedom though, managing the way you use it is essential. Ignoring your credit card charges and letting your debt pile up is bad.

On the other hand, it is equally unwise to micro-manage your credit card account based on hearsay or myths floating on the internet.

They may sound like positive credit card management, but are in fact harmful to your credit history. Don’t let these six unsubstantiated claims destroy your credibility:

1. Cancelling your cards

It may seem like a good idea to cancel your cards if you think you’ve been spending too much money.

Cancelling them is not nearly as good a decision as actually controlling how much you use them. By cancelling your card, you place yourself and your credit score at a disadvantage.

When you cancel a card, you automatically have less available credit, and this increases your debt-to-credit ratio.

It may then be harder for you to get loans in the future with this lower credit score.

2. Not using your cards

It may also seem like a logical idea to discontinue using your credit cards to stop racking up a large amount of debt, but this can backfire as well.

If you keep your credit card for emergency use only, it will limit you from establishing a good credit history.

Conversely having a card, using it regularly and paying your bills on time will actually build a good score for you in the future.

3. Owning just one card

Your credit rating can also be affected if you only have one credit card, as this is not a great way to build up a line of credit and credit history.

Both the line of credit and credit history are important for your future in getting a loan for a house or car.

If you have two or three credit card accounts, use them sufficiently and pay your bills on time, you are showing that you are reliable and responsible to more than one creditor.

Credit card companies will give you a higher limit if you maintain less debt. 

4. Having a low credit limit

When you open a credit card account and a lower credit limit is set for you than what you feel you’re entitled to, it’s not always a good sign. It means that the credit card company does not feel comfortable lending you a higher amount of credit.

You can keep this from happening by paying off some of your current debt before applying for a card. By having less debt in your name, credit card companies are more likely to grant you a higher limit when you apply.

5. Building your credit by maintaining a balance

Many credit card users think that if they do not pay off the balance on their cards, keeping the balance there will help them build up their credit history.

This is simply not true. It is better to pay off the balance every time it’s due because that is what lenders want to see.

By doing this, you’ll actually end up with a better credit history than if you consistently carry an outstanding balance.

6. Applying for multiple cards at once

Because you go through an extensive credit check before being approved for a credit card, lenders can see if you are applying for multiple cards at the same time.

This can be harmful because it gives the impression that you want to have a large amount of credit available within a very short period of time.

It is highly likely that your applications will be denied. To avoid this scenario, wait at least 90 days between each application so there are not too many red flags raised all at once.

Following these simple steps will help you get the credit card that you want. There are many things you need to be certain about before you apply for these cards.

You always want to make sure that you don’t take any steps which you may think are good choices, but which can actually work against you in the future.

By keeping things clean and paying your bills on time, you should not have any issues with your credit cards.

This article first appeared in The New Savvy.

The New Savvy is Asia’s leading financial, investment and career platform for women. Their bold vision is to empower 100 million women to achieve financial happiness. They deliver high-quality content through conferences, e-learning platforms, personal finance apps and e-commerce stores.