Quoted on CreditCardInsider.com on Applying for Credit Cards and Common Mistakes with Credit Cards

Recently the financial website creditcardinsider.com asked me to answer several questions about applying for credit cards, having credit cards and common mistakes with credit cards. Below are my responses:

Should everyone have at least one credit card?

Yes, everyone should have at least one credit card. Having a credit card can do three things.

First, if you do not build up a big balance, having a credit card will help you improve your credit score. The credit score companies like you to have a card, but they don’t want you to use it too much. As an example, Experian wants your credit utilizing to ideally be less than 6%. That means if your credit card has a limit of $10,000, ideally you should have no more than $600 on the card.

Second, if you make your payments on time, over time it will help your credit score, plus give you a credit track record, which may make it easier to get other credit in the future.

Third, if used properly (which means paying off the balance each month) credit cards are great for emergencies – like when the auto repair shop says it’s going to cost $800 to fix your car.

Hint: To maximize the value of your credit card in relationship to your credit score, go online and find out your balance just prior to the statement date, then pay off the balance. The credit card companies report the balance to the credit bureaus once a month, typically on the statement date. If you pay off or pay down the balance prior to the statement date, it could improve your credit score.

What advice do you have for someone who is applying for a credit card?

There are lots of choices with credit cards. Typically credit cards offer one of three perks: 1) cash back rewards, 2) mileage points or 3) low interest. It is not difficult to understand that the interest on cash back and mileage point cards are typically higher than those cards that have lower interest. Someone must pay for those perks. If you are the type of person who pays off your card each month, go for the cashback rewards. If you need to carry a balance, find a low interest card. Beware of mileage cards as people who have lots of mileage points often find it very challenging to actually book anything with those miles.

Are there any requirements to qualify for a credit card?

There are requirements, but typically very little requirements to get a credit card. I know someone who is in the United States on a tourist visa, who continually gets credit card solicitations in the mail. Credit card companies love to give out credit cards because many consumers use them irresponsibly, charging up high balances and then paying up to 29% interest on those balances.

Are credit cards safe?

Most credit cards are safe. Most credit cards will cancel any charges made to your card if your card is lost or stolen. Also, many credit cards will let you “charge back” charges from merchants whose products don’t work or who don’t provide services as promised. This feature can be very helpful when making online purchases from less known retailers. Also, today credit card companies have improved credit card security using chips, and credit card systems where the credit card never leaves your sight (as opposed to the credit card being whisked into a back room for processing, where the credit card information can be copied).

Are there common mistakes consumers make when picking a credit card?

The most common mistake consumers make when picking credit cards is picking cards that promise great rewards and zero-dollar balance transfers. Zero-dollar balance transfers are fine if you carry a balance, but your goal with a credit card should be to have a zero balance. Some credit card companies offer extra protection when traveling such as providing rental car insurance, so you don’t have to purchase it. Check out the full list of benefits provided to cardholders – don’t just focus on the benefits card issuers advertise. And any card that is advertised a lot, in my opinion, is probably not the best card to have. Also, stick with your card. Don’t be cancelling cards and getting new cards because you think the benefits of the new card are better. The longer you have card, the better it will help you credit score.

You can check out the original post on by going to: CreditCardInsider.com/manahan