5 Essential Credit Card Rules You Need to Know

Whether you're a seasoned credit card pro or someone who's new to the world of plastic, there are five rules you'd do well to remember. After all, credit cards can make or break your credit rating. You don't want it to be the latter. With that in mind, here are five credit card rules to live by...

1. On Time Every Time

Think one late payment won't hurt? Think paying a day late can't harm your credit card situation? Think again. One late payment and your credit card company can hit you with the "universal default" rate (usually about 30 percent) instead of the great rate you signed up for.

Even if you don't get hit with a higher interest rate as punishment for that late payment, you will end up paying a late fee. Unless you want to pay £30 because you paid your credit card a day late, I suggest paying on time every time.

2. Read The ToS

The ToS (Terms of Service) that is sent with your credit card is not simply paper padding to protect the thin piece of plastic as it goes through the mail. It's actually important reading. It tells you what your grace period is, what your interest rate is, what the default interest rate is and other important information.

It's a pain in the rear. The print is small and the material isn't exactly exciting, but you are obligated to read these Terms of Service. The minute you use your credit card, you are agreeing to them. Technically, the ToS can say "you give us the right to your first born child" and if you didn't read them, you'd never know.

3. Stay True

Jumping from one card to another to take advantage of their teaser rates may sound like a good idea, but if you close accounts once you do so you're actually hurting your credit rating. Part of your credit score is determined by the length of the relationships you have with your creditors. If you're maxing your credit card relationships out at six months, your score is going to take a hit.

4. All or Nothing

A credit limit is not a license to spend. If you have a credit limit of £5,000 it doesn't mean you should go out and max out your card. Only spend as much as you can pay off in any given month. If you can't pay your bill in full at the end of the month, you're going to be paying interest and that's not a good thing. Bottom line - don't charge more than you can pay off unless it's a dire emergency.

5. Know Your Cards

Almost all credit cards come with some type of perk. Whether it's as basic as online account management or as extravagant as 24/7 concierge service, know exactly what your credit card offers and take advantage of these perks.

And there you have it... Five credit card rules to live by. The credit card game can be a confusing one, and many have played and failed. Fortunately, many more have played to win.