How To Use Credit Cards Responsibly

Credit cards can either make or break your finances.  Many have wallowed in debt because of this plastic convenience card.  There are a few, however, who have greatly benefited from the use of credit cards.  Learn the rules of this relatively new innovation so you can use credit cards to your advantage.

Do not use your credit card for your daily expenses.

Using the credit card to buy your everyday needs is almost a surefire way to end up in debt.  Items like food, gas, clothing, personal and household care products are better bought with cash rather than charged to your credit card.  When there are just too many items charged to the card, tracking of credit becomes increasingly difficult and ultimately, impossible.

If you can help it, pay for more than the minimum payment.

If you opt to pay for just the minimum payment each month, it will take you longer to pay off your debt and you’ll end up paying higher cumulative interest.  The rule is to pay as much as you can each month.

Do not use your credit card for things you cannot afford.

When you can’t afford to buy something this month, chances are you still can’t afford to buy it next month.  Living off on borrowing is not a good thing to do.  Buy only those things which are within your buying or paying power.  Better yet, write down a budget and simply buy according to that budget.

Do not close your credit cards hastily.

Closing credit cards will greatly reduce your credit score.  In general, refrain from closing credit cards which still have available balance and those which figure prominently in your credit history.

Build a transparent relationship with your creditor.

There are many advantages to taking the time to build an open relationship with your creditor.  For example, on some months when you find yourself unable to pay your credit, you can politely ask him to waive your late payments.  Most creditors will respect such transparency and would gladly assist you in your financial problems.

Do not go beyond 30% of your credit limit.

Your credit score is inversely proportional to your credit balance.  This simply means that the more debt you have, the lower your credit score is.  Of course, lower balances are much less scary than higher ones.

Negotiate for a lower interest rate.

From time to time, check to see the interest rates of your credit card.  This is especially needful if you have lately been receiving offers of lower interest rates.