The Right Approach to Using Credit Cards

You might have heard of stories about credit card debts gone real bad, maybe you have even lived that story.

Many people would tell you that credit cards are just like cashless shopping. Unfortunately this gives some people the notion that with a credit card they can spend as much money as they want, but at the end of the day remember that you still have to pay for all the things that you purchased.

When you realize that you do not have enough money to pay for your credit card bills, then this is when the real nightmare begins.

As always, discipline is the key in handling your finances, including your credit card usage. You should use your credit card wisely from the first day that you have it. Here are some tips to guide you on how you can take advantage of your credit card and not the other way around:

• Only use your credit card when necessary. If you have some cash with you, spend it rather than using your credit card. This way, you would use your credit card only in rare occasions or in case of emergencies. Some people like to use a credit card for everything to build rewards or rebates, which can work well as long as you maintain discipline and follow the remainder of these tips.

• You can save a big chunk of money if you pay your credit card bills on time all the time. By paying your bills promptly can help you avoid late fees. Not only will you avoid late fees but you will also benefit your FICO score, as timely payments is one of the 5 steps to improve your credit score.

• Do not go over your credit card spending limit. This way, you would not have to pay more for penalties. By avoiding fees and penalties, you will prevent yourself from digging a deeper hole each month.

• It is not a good idea to have a truckload of credit cards in your wallet. One or two credit cards should be sufficient. Make sure that you choose a credit card that suits your needs, your budget and most especially, your lifestyle. Having too many credit cards may just tempt you to spend more. Juggling payments and due dates between numerous credit cards may also cause confusion and increase the chance of missing a payment.

• Request a due date that is convenient to your normal payment schedule. So that you can be reminded of your credit card bill, request that your due date be set on the same time that you pay your monthly bills like your electricity, water bill and mortgage payments.

• When using your credit card, pretend like you are spending cash. This means you must spend only what you can pay for. If you have a regular monthly income of a certain amount, then do not go over your limit at all cost.

• Keep all receipts of your credit card purchases. Make sure that they coincide with your credit card’s monthly statement. Report any discrepancies and unauthorized use of your card if you see something amiss with your bill.

Using your credit card responsibly will help build a positive credit history as well. Maintaining a good credit history is very important, particularly if you foresee a need for a mortgage, car loan, or any other type of loan. If you’re currently carrying a large amount of credit card debt, it is not too late to make progress.

Start following these tips today and begin using your credit cards properly!