Credit cards are not evil for everyone. Yes, some people should be using cash and should never have a credit card, but there are some out there who are great with using credit cards. Below are my tips to become one of those people.
If you can’t afford what you are about to put on your credit card, then you just need to put it back in your wallet and step away! Only buy what you can truly afford. If you carry a balance each month and you are paying interest on your balance, then your balance is too high. You should be able to pay off your balance fully each month (unless your interest rate is at 0% and you plan on paying it off later).
Watch your credit limit.
All credit cards have a limit. Not everyone has the same though, so this is something that you should specifically know.
Also, it is important to know that you should never spend more than 30% to 35% of your credit limit. So, if your credit limit is $1,000, then you should try to stay below $300 to $350 so that you do not hurt your credit score. Your utilization rate is very important when calculating your credit score.
Pay your credit card bill on time or beforehand.
If you always forget to pay your credit card bill, then you need to try to schedule something into your phone for months into the future that reminds you to pay your credit card bill each month. Do not forget! You will be charged late fees, penalties and it will also hurt your credit score.
Review your transactions.
You need to review your credit card transactions every so often. Some choose to review their transactions each day, some do it each week, and some do it each month when they receive their credit card bill. No matter what, you should always review it!
There may be errors, and who wants to pay for those? You never know, a retail store clerk may have accidentally ran your credit card twice. I have had this happen multiple times but have caught it on my credit card bill and have had it taken off.
Also, your credit card may have been stolen. Someone may be charging small amounts on your credit card so that you do not notice. You will never notice if you never check your credit card statement!
Do you use credit cards responsibly? Or do you try to stick with cash?
Picture via Flickr by Mike Linksvayer