How
much credit should I manage?
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Experts recommend that your credit card payments be no
more than 15-20 percent of your current income, after paying
for housing costs. If you are just beginning to use credit,
these steps can help you manage it:
1. Borrow only what you need and can repay: A credit limit
of $500 or less may be all the credit you need. On the
other hand, you may need a $25,000 line of credit. Consider
applying for a larger credit line as you become more comfortable
with managing your spending and payments.
2. Understand the cost of credit: People who don't know
how much they are paying to use credit are the most likely
to have problems. Be sure you know the Annaual Percent
Rate(APR) and other fees for borrowing on each of your
credit cards.
3. Pay bills according to the terms of your contract:
Late payment and overlimit fees can add hundreds of dollars
to the cost of credit each year. It's smarter—and
much less expensive—to pay credit card bills on time
and follow the other terms of your credit agreements.
What if I don't have a regular income? Should I avoid
using credit?
The answer to both these questions is: Consider your available
funds—money from family, part-time job income, and
future income—when you're deciding if and how to
use credit. If you already have a credit card, use it wisely.
Your best strategy is to have a credit card for convenience
and pay the balance in full each month. You may also want
to have credit available for an emergency.
AMEX
