Admit it, the first time you got your hands on your very own credit card, nobody really sat down with you to explain the responsibilities that go with it. Or if somebody did try to remind you to use it wisely, you were too excited to go shopping to even hear what that person said.
In your mind, you are becoming an adult by having access to something so powerful. Unfortunately, you may not have the maturity and the discipline to actually use a credit card responsibly. Maybe you don’t know it yet, but surely you will pretty soon if you don’t finish reading this article, but millions of Americans find themselves neck-deep in debt because of the unwise use of their credit cards.
And we’re not talking about just one credit card. We are talking about several that you have used unabashedly on different occasions. Being unwise means splurging on things you do not really need, buying things that are unplanned just because they are on sale, spending beyond your capacity to pay at the end of the month, or trying to keep up with a lifestyle you can barely afford to mention a few.
Plan your expenses.
Commit not to use your credit card for any unplanned purchases. If you are married, you and your spouse must agree on certain expenses that can be charged to your credit card.
Pay your monthly bill on time.
When you fail to pay on time, the interest rates you will eventually be paying will go higher. Unpaid principal and interest rates can grow exponentially when left unattended. You must be able to set aside an ample amount of money each payday in order to pay off your credit card every cutoff.
Maintain a credit card balance that is below 30% of the total credit line.
Credit card usage has a big impact on your credit score that is why a lot of creditors will also advise you to use it as often as you need it. However, you need to be mindful to keep it at 30% or less of the total amount allowable in your credit so you are not burdened by your monthly financial dues. If you find yourself spending beyond the 30% mark, then you might want to consider paying the amount little by little before it is even due just so you can keep your goal intact.
The abovementioned tips are just a few of the many ways that you can use your credit card responsibly. Surely, when you undergo credit counseling, you will learn more from the experts. Surely, you will also learn as you go along but learn fast. Study your options and do not let yourself be deceived by fancy promises that advertisements offer.
Increase your financial literacy and always do your research and look into the benefits and downsides of a certain credit card product. At the end of the day, you have control over your usage. Use your credit card responsibly and use it to help you reach your goals.