Maintain an Ideal Card Balance

Today, almost anyone can apply for a credit card. Even first year college students are favored by many credit card companies. It's no wonder that the average American household is burdened with at least $10,000 in credit card balances from month to month.

Becoming an Educated Consumer

While hundreds of credit card companies shower consumers with advertising explaining how their credit cards can make their lives more convenient, they fail to educate consumers on how a credit card should be maintained.

Education will keep you from becoming one of the victims of credit card debt. Important credit card guidelines include knowing your credit limit, avoid maxing out your credit card, and understand just how to maintain an ideal credit card balance. Knowing these general guidelines can help prevent the possibility of a burdensome debt load.

Managing the Balance

Maintaining a credit balance can be a great challenge, but it is possible. Absolutely the best way to prevent credit card debt from getting out of control is to establish a manageable budget before you even start using the card. After establishing your budget, track your spending and, above all, stick to the budget you have established. Below are several additional tips on how to manage and maintain an ideal credit card balance.

1) Manage Your Expenses

The success of your credit card management begins as soon as you use the card to buy any product or service. To maintain good credit, however, you need to make it a habit to track your spending. Ensure your statements are accurate and always be sure to thoroughly review your monthly bill when it arrives. Verify any discrepancies and report them to your credit card company immediately.

2) Pay Your Dues

Never skip monthly payments. If you can only afford to pay the "total minimum due," pay that immediately upon receiving your statement. If possible, make another small payment on your card before the due date stipulated on your statement. This will spread out the payments a bit, but will be equally effective in paying down the balance and should not drastically affect your cash flow too negatively. And as always, try to avoid only paying the monthly minimum payment. Depending upon the ongoing APR of the card, carrying a card balance can be an exceptionally expensive proposition. When you use your card for additional monthly purchases, combined with carry-over credit balances from prior months, this can dramatically increase the amount of your average daily balance and increase your exposure to more finance charges. So really stretch to pay down your card balance as aggressively as possible. Ideally, you should pay down the entire balance every month, which happens to be the least expensive method of dealing with any card balance.

3) Monitor your Credit Limit

The "Available Credit" on your credit card statement is the amount of credit you have left. This is computed by reducing your total credit Limit by the outstanding balance still on the card. At the bare minimum, make absolutely sure that you do not exceed the credit limit on the card. Never, ever max out your credit card. Maxing out your card and going beyond your credit limit can have a pretty severe adverse effect on your credit rating. Be sure to keep at least 20 percent of your account's "Available Credit" as a credit cushion for emergencies. Ideally, you should try not to utilize more than 35-40% of your available credit limit at any one time.

4) Know Your Payment Obligations

Pay attention to the payment due dates stipulated in your statements. This will prevent possible payment delays to your creditor. Since you can be charged a late payment fee, it is best to settle your payments at least a week before they are actually due. Know your obligations. For instance, people who are changing addresses should inform their credit card company about the new address. Remember that even if your statements will not reach you, it is still your responsibility to settle your debt. If not, an ugly credit history will haunt you for years.

5) Budget Your Monthly Bills

In general, at least 10 percent of your monthly income should cover your credit card bills, lines of credit, and/or personal loans. If you're paying more than you're making, re-evaluate your monthly expenses. Avoid large impulse purchases and organize your budget by utilizing a spreadsheet. If you do not have access to Microsoft's Excel spreadsheet program, try using Google's spreadsheet - it's brand new online, it's easy to use and best of all, it's free.

6) Take Control of Your Debt

To keep your finances under control, create a personalized payment plan that will allow you to clean your record. Your plan should include all creditors to pay and the amount you have to pay them each month. Settle all your bills on time.

Contact all of your creditors and, if necessary, request a more flexible payment schedule, which you can pay monthly or even bi-weekly. Almost all creditors will be willing to work with you if you show initiative and willingness to contribute meaningfully.

Credit cards can be a great convenience if you use them properly. Over-extending your credit can lead to a huge debt burden or, worse yet, even bankruptcy. Don't let this happen to you. Take the steps necessary to maintain ideal credit card balances. Above all, take control of your finances by planning effectively and being proactive in your credit card repayment efforts.