• A high credit limit improves your credit score – Have a credit card with a high credit limit increases your debt-to-income ratio, which comprises about 30 percent of your overall credit score. Therefore, a credit card or two with a high credit limit boosts your debt-to-income ratio, thereby raising your credit score. However, there’s a catch: every time you spend on your credit cards, your credit score lowers. Spending a bit doesn’t affect it much, but spending at or near your credit limit surely does. It is therefore vital that you never flirt near your credit limit for any length of time.
• A high credit limit provides you with a financial cushion – A credit card is a very useful financial tool, particularly if you find yourself in a financial emergency. Having access to a large credit line is incredibly important because it protects you financially if you need access to cash in a pinch. From a broken down furnace to emergency travel plans, having access to a credit card with a high credit limit is invaluable.
• A high credit limit allows you to keep the cash at home when you travel – If you travel on business or pleasure, a credit card can be your best friend. However, a credit card with a low credit limit won’t get you very far. Instead, a credit card with a generous credit limit allows you travel and charge everything from your airline tickets to your hotel room and leave the cash at home. In addition, using credit cards for travel also affords you a number of protections, including everything from travel interruptions to lost luggage.
• A high credit limit allows you to transfer higher-rate balances – If you are currently paying too much interest on other credit cards or loans, having a credit card with a high credit limit will allow you to transfer those higher-rate balances onto your credit card with a competitive interest rate.

Your credit card’s spending limit affords you freedom and flexibility and, thus, overspending and going over (or near) your credit limit may affect you in a number of ways. Here is what you need to do to stay safe when it comes to your credit card’s spending limit:

• Set your own personal spending limit. If your credit card has a high credit limit or no limit at all, it may seem useless to worry about spending on your credit card. However, it pays to note that, regardless of whether you stay within the card’s predetermined credit limit, your credit may be affected by your spending. High balances on your credit card not only put you in a vulnerable financial position, they may result in finance charges. In addition, high balances on your credit card can quickly spin out of control and create monthly minimum payments that are beyond your budget.
• Aim to never spend more than 60 percent of your credit limit. Your personal credit score is determined by a number of things, one of which is your available credit, or your debt-to-income ratio. Your debt-to-income ratio is the amount of available credit you have at any given time, so if you spend at or near your credit limit, your available credit is diminished, thereby lowering your credit score. If you make a conscious effort to spend no more than 60 percent of your credit limit, you will not only protect yourself financially, but you will also protect your credit score, as well.
• Never, ever exceed your credit limit. Your credit card company will likely impose fees and higher interest rates if you exceed your credit limit, so it is important to always be aware of your credit limit and to never exceed it. Luckily, online tools can help us keep up to date on our daily balances, thereby helping us to prevent overspending.

Here is what you need to know about secured credit cards:

• The credit limit on a secured credit card is equal to the deposit you put on the card. In other words, if you want a secured credit card with a $500 credit limit, you will need to supply the credit card company with a deposit of $500.
• Secured credit cards are available through a number of banks and issuers, and finding a secured credit card is as simple as searching the Internet. Many credit unions also offer secured credit cards, so it may be worthwhile to check with your local credit union.
• Secured credit cards are not created equal. Like traditional credit cards, there are good secured credit cards and not-so-good secured credit cards, so it pays to do your research before choosing a secured credit card. In other words, read the fine print and ask plenty of questions so you fully understand the card’s terms and conditions before applying.
• Secured credit cards are ideal for individuals with no credit or bad credit because they often report your monthly payments to the credit reporting agencies. In fact, secured credit cards may be the best way to rebuild or build your credit. Ask the credit card company about their credit reporting agency reporting procedures, as some companies report more regularly than others.
• Secured credit cards are a great way to make the transition to traditional credit cards. Many secured credit issuers will allow you to convert your secured credit card into an unsecured credit card once you have shown regular payments for a set period (usually six months to a year). Or, you may be able to reduce the amount of your deposit in relation to your credit limit after you have a number of months of payments under your belt.

• Small business features – One of the biggest reasons small businesses choose small business credit cards is because they often include a include a number of features that allow businesses to track their spending each month. If you want to remedy your tax headaches when tax time rolls around, consider getting a small business credit card and use it to purchase all of your business-related expenses so you have a clear record for tax purposes.
• Rewards – From cash back rewards and airline miles to discounts and special perks, many small business credit cards feature rewards. Remember, also, that rewards for small business credit cards build up quickly due to larger and more frequent purchases.
• Credit limit – Most small businesses benefit from small business credit cards because they typically offer higher credit limits than personal credit cards.

Once you have found a small business credit card that fits your business’ needs, there are a few things to consider:

• Terms and conditions – It is vital to thoroughly read the card’s terms and conditions because they often differ greatly from personal credit cards. In short, business credit cards are not covered under the blanket of protection that personal credit cards are afforded through the CARD legislation. Because of this, creditors are likely to impose much stricter terms and conditions on small business credit cards than personal credit cards.
• Interest rate – Small business credit cards are often chosen to help businesses in tighter financial times throughout the year; as such, you may not be able to pay your credit card bill in full every month. It is therefore important to compare interest rates between small business credit cards. It is not uncommon to find very different finance charges between business credit cards, so take your time and compare interest rates.
• Credit limit – A small business credit card is only as good as its credit limit, so make sure the credit limit on your chosen small business credit card will suit your company’s monthly spending.

However, you may want to think twice about using your credit card in the following circumstances:

• If you’re close to your credit limit – One of the factors that credit reporting agencies consider when determining your credit score is the amount of available credit. Therefore, if you charge to the limit on your credit cards your available credit is diminished, which therefore lowers your credit score. It is always best to avoid carrying a balance of more than 30 percent of your credit limit to keep your credit score intact.
• When you receive notice that the interest rate on your credit card will increase – The new CARD Act requires creditors to give customers a 45-day notice on rate increases; however, your rate may actually increase just 14 days after you receive the notice. Instead of spending on your card, take this time to negotiate a lower rate with your credit card company or find another card with a more competitive rate.
• If you know you can’t realistically pay off the balance in a reasonable amount of time – The best case scenario, of course, is being able to pay your credit card balance in full when the statement arrives. However, if you have a game plan in place to pay off the credit card balance over the course of a few months then it is probably okay to use your credit card. The trouble comes when you begin making purchases without having a plan in place to pay them off. Think twice before making a purchase and ask yourself if you can realistically pay off the purchases in a reasonable time frame.
• When you are purchasing something from an unknown website – To play it safe, it is always best to stick to purchasing online items from trusted websites. It just doesn’t pay to risk your identity and credit card information paying for a purchase from a website of which are you unsure.

There are a number of ways to meet your financial obligations and still manage your credit cards successfully; you must, however, be committed to a number of obligations if you expect to enjoy the many benefits of credit cards.

1. Always make a point to establish an emergency savings fund so that you won’t have to rely on credit cards if an unexpected expense creeps up. Putting a large purchase on your credit card may make it incredibly difficult to pay off, thereby setting you up for long-term debt.
2. Always take a moment to question your purchase so that you can decide if you are living within your means. A spur-of-the-moment trip to the beach many sound like fun, especially if you have a large credit limit, but you must think hard about whether this type of credit card purchase can be realistically paid off in a reasonable amount of time. The problem with credit cards is often that individuals get the false sense of having money because they have their credit cards in their back pocket.
3. If you are unable to pay off your credit card balance, in full, make a commitment to stop spending until the balance is paid off.  Making this small commitment to yourself will likely mean the difference between living within your means and living with credit card debt.
4. If you are saddled with too much credit card debt, take the time to set up a realistic repayment schedule and stick to it. Instead of simply paying the minimum payment, treat your credit card bill like any other bill and stick to the monthly payment you set up. You may even want to set up an automatic bill payment so that you won’t be tempted to pay less each month. You can often find calculators online that will provide you with a monthly payment amount that will allow you to reach your credit card payoff goals.

These excellent numbers are likely a result of two factors:  consumers are becoming better equipped to handle their debt; and creditors are taking measures to protect their financial interests.

Some of the changes creditors have made as a direct result of the national recession and credit crisis include the following:

• Creditors have lowered credit limits across the board, thereby preventing consumers from overcharging on their credit cards. You may have received a letter from your credit card company regarding this change. You may be able to contact your credit card company and dispute this change, particularly if you have a strong history with them.
• Creditors have begun closing accounts due to inactivity. Many creditors have cut the fat, so to speak, by simply closing accounts that are not being used anymore. If you have a credit card that doesn’t get used anymore, you may have received a letter from your creditor announcing that they will close your account. You may also have received a letter from your creditor stating that “inactivity fees” will soon apply if you don’t use your credit card.

The best rule of thumb is either to cancel the card you no longer use, or to make a purchase on it at least once or twice a year to avoid the dreaded inactivity fee.

• Creditors have written off many of their uncollectible accounts. For many creditors, the process of tracking down severely delinquent customers is simply not worth it, financially speaking.
• Creditors have begun approving credit applications for individuals with the best of credit. Risky credit card applicants need not apply under the eyes of many creditors. The risk of approving an individual with iffy credit simply isn’t worth it anymore to creditors. In other words, don’t expect an approval letter unless your credit score is clean.

Due Dates

Make sure you know when that bill is due; not only the date, but check for time of day, as some companies charge penalties if the payment comes in after a certain time. This will help you to get that bill paid on time. This should not be very hard for most, especially now that the new credit card laws will soon be in effect and your bill will be required to be due on the same day every month.

For holders of multiple cards, this can get tricky. Use a calendar to track due dates, set up automatic pay and e-mail reminders, or consider calling your numerous companies and trying to get your due dates in sync based on what you can afford.

Watch Paying Minimum Balances

Admittedly, it is nice to have the option to pay the minimum balance on your card when money is tight. However, doing this often does not help you out. You are incurring more and more interest on carried balances. You wind up paying a lot more in the long run. To protect yourself and your credit, it is best if you can keep your balance down and pay the balance due  in full each and every month. If you are having a hard time, try to at least pay more than the minimum balance and work as fast as you can to pay off the rest. Remember, if you don’t carry a balance, you don’t carry any interest, saving you lots of money and headaches.

Keep Your Debt Under Control

Watch your credit card spending. Do not pull your card out for every purchase. If financial troubles hit, curb or eliminate your spending until things are back on track. If the debt is mounting, do not ignore it. Take control, stop spending, pay down your balances and cancel the card or cards if you have to. Save yourself from debt. You don’t have to sign your soul over to the credit card companies!

This does not apply to credit cards alone. Want to save your credit score and your good rates? Watch all of your debts. Those credit card companies can and will monitor customer credit reports. Any slow-pays or no-pays will send up the red flag, whether or not the credit card company has any real reason to worry. You will then be tagged as a high-risk and might be penalized with lower limits and higher interest. Who wants that?

Learn to budget, pay down your debt, give up those little (and big extras) until you have control. Take care of debt first and foremost and save you credit score from falling into a hole that is near impossible to crawl out if. If this does occur, give credit cards up until you can gain control. Use other methods to rebuild your score once your debt is paid down and think about credit cards later on when you have the means and the knowledge to keep things flowing smoothly.

On the Path to Rebuilding Credit

If your credit is already terrible, but you are absolutely serious about getting things under control, there are some steps you need to take. Start working out payment plans and paying down your debts. Work with a credit counselor or debt consolidator if you need to. Check your credit report to ensure that your progress is being accurately reflected and that no inaccurate information is appearing. Continue to pay your current bills that are not in default or arrears on time and in full every time they are due. This will go a long way in improving your credit report and might lift your score upward several points.

Once you have all this debt behind you, it is time to think about rebuilding your credit. If you want to be deemed credit worthy in the future, you need to get that score up and keep it up. There are several options to look into for rebuilding credit, however, you have to decide which ones are the right fit for you. You could buy a car from a place that offers financing, pay your payments on time and your credit score will be improved as your activity is re3ported over time. You could also go the rent-to-own route for furnishings and appliances, so long as the company reports your activity. You bank accounts are another good way to help build credit.

There are lots of other options out there, among them credit cards for those with bad credit. Should you do it?

The Credit Card Option

It is not a bad idea, per se, to open a credit card account and get your hands on a high interest card with a low credit limit in order to help rebuild your credit score. It can work and work well, if undertaken in a responsible manner. You will need to use the card wisely, ensuring that you not only pay the bill and pay it on time, but that you pay it in full, as this can make a bigger difference in your credit rating and your finances than a minimum payment.

Now, if you are suffering the low income or no income blues, this might not be the option for you at this time. When you’re back on top of your game, you might reconsider it. If you problem is poor spending habits or financial irresponsibility, you might want to get help to get this under control before you obtain a new credit card to rebuild your credit. If your credit has already gone down the drain, there is no use getting a new card that you can not or will not pay for. A card intended to rebuild your credit can not do it’s job if you don;t do yours. You’ll simply be left with more debt and an even lower credit score.

Whether you were approved for less – or more – than you thought, you should know that there is actually a formula that credit card companies use to determine your credit limit.

• The first thing a credit card company will do when you apply for a credit card is look at your credit score. Your credit score (often referred to as a FICO score) is a clear indication of how you have managed your debts in the past. The scoring used in a credit score also predicts your ability to repay loans in the future.
• Credit card companies, after they look at your credit score, will then look at your debt levels and your income. Your debt levels, also commonly referred to as a debt-to-income ratio, is a common reason why many people, although they may have a gleaming credit score, will have lower credit limits. It is the credit card company’s way of protecting credit card customers from more debt than they can financially handle.
• In addition to looking at all of the above factors, a credit card company will also examine your current outstanding credit, or the amount of credit on other loans and credit cards that you have open and available. For example, if a credit card company notices that you have another credit card, but that it is maxed out, this may raise a red flag that you are taking on more debt than you can handle; as a result, your credit limit may be significantly lower than your previous credit card.

Many times, your credit card company will automatically raise your credit limit if you have established a good track record of punctual payments. However, it is also important to point out that creditors are also able to lower your credit limit if you show a steady of history of late payments.

The best thing you can do maintain a good credit score and ensure that you are eligible for higher credit limits is to make your payments on time, each and every month, and to keep your spending in check and not top out your credit limit.