Credit card rules

1. If you can't afford it, don't charge it.

A card represents cash. A totally cashless society is becoming less futuristic every day. The plastic card represents only the amount of money you can afford to spend.

1. Ignore bankers' rules on what is an "acceptable" level of debt.

Your debt to income ratio is a measure of how much debt you carry to how much money (after taxes) you have coming in. The ideal number is 0%, but at the very least you want to keep your debt – including car loans – to 15% or less of your after-tax income.

1. Don't pay by their rules.

The "minimum amount due" is not enough to realistically pay off the credit balance any time in the foreseeable future. A $4,500 balance will take 44 years to pay off at minimum payments, even if you don't put another dime on the card. The interest while you pay it off is $17,000!

1. Play the system.

Remember, you're the customer. Do you want a lower rate? Sick of paying an annual fee? Uninterested in paying the $35 late payment fee? Just ask! Your lender would rather keep you as a customer than shell out (anywhere from $50 to $150) to acquire a new customer. Use your leverage.

1. When you get in trouble, stop charging.

If you find yourself struggling to make even the minimum payments on your credit cards, stop, drop and roll. Stop charging! Drop your spending. Roll your balance over to a card that charges a lower fixed interest rate if you can.

1. Check your credit score.

Find out what your three-digit FICO score is. A perfect score is 850. Check what's there to make sure your record is an accurate reflection of your borrowing history.

1. Carry just what you need.

Most people need only one or two credit cards: one for purchases they pay off every each month, and another for emergencies (or business purposes). Any more than that is usually overkill. If you consolidate your spending to one card, consider getting a "rewards" card where you earn miles, points for stuff or cash back.

Barbara Bachelder, CFP® for Wealth by Design, LLC