Understanding Credit

Helpful Tips on How to Use a Credit Card Responsibly

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There are some people that refuse to use credit cards thinking that if they don’t use them, they won’t get into difficult situations. The truth, however, is that credit cards can be powerful tools if they are used properly. They can help you build up your creditworthiness and increase your credit score if you use them wisely.

No one likes to be in debt, which is why it’s important to know how to be smart when using your card and follow some simple tips in order to make sure that you make the most of your credit card purchase ability without spiraling into debt.

If you don’t misuse them, then you have nothing to worry about, and you will stop seeing them as an evil that should be feared. Using credit cards wisely can help you build a strong, fantastic credit score that will help you receive lower interest rates and other special “deals” when someone sees your high score.

Here are some helpful tips on how to use your credit card responsibly:

First of all, you should be paying off your balance each and every month. Simply put, this is the only way to make sure that you do not get affected by high interest rates. If you fail to make the payments, then you will end up spending more money than necessary. Depending on the type of card you have and from which bank, if you skip payments that can result in some high penalty interest rates and your credit score will take a hit. If you can’t pay the full statement balance, then you should at least try to make a minimum payment instead. Set a reminder for yourself so that you never miss your payment due date. Missing a payment is the best way to see your credit score drop significantly.

Depending on your income, try not to go overboard when it comes to making purchases. Try to buy things that you can afford already. While buying things immediately instead of saving up money can sound like a good idea, if you don’t already have money for it do not put it on your credit card. If you make these types of purchases, then you could end up in a debt spiral and it could ultimately damage your credit, and your finances for years to come.

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You should keep track of your purchases. While it might sound like an obvious thing, checking your credit report is the best way to make sure that you’re not getting into debt by ‘accident.’ Making small purchases can sound like a good idea, but over time they can accumulate, and if left unchecked you might not realize that debt snuck up on you. The best way to make sure that doesn’t happen is to simply check your credit report to keep up with your purchases and know what you’re spending money on in order to be more responsible in the future. Another option would be to keep your card for bigger purchases and pay everything else in cash.

Try setting some limits. Your card already has a limit on how much money you can spend, but if you feel like you might still end up spending too much, then you can simply ask the bank to lower the limit. It might sound like too much of a drastic measure, but if you know that you can spend more, then chances are you might end up spending more, which is why having a limit is important. Additionally, read up on what perks your card offers and also take advantage of all the rewards you can. The rewards can range from cash-back to hotel loyalty points to airline miles for plane tickets. Try chasing the rewards that you know you can pay in full because you don’t want to pay interest on those purchases by missing your payment due date or by not affording it.

You’ll want to make sure that you make ALL payments on time, every time. This should be common knowledge, but payment due dates can be overlooked or forgotten about when life gets super busy or while you’re away on vacation. Make it a top priority to pay all of your bills on time each month. You can set up automatic payments or even just a reminder or notification on your Smartphone.

Be sure to read your customer agreement and disclosures very closely and know your terms. When you open a new credit card account, make sure you read the fine print and know what you’re getting yourself into, and what is expected of you to keep your side of the agreement in good standing. You need to know your payment due date, fees, interest rates (they could be multiple rates), and other pertinent information.

Check your monthly credit card statements thoroughly because billing and transaction mistakes can and do happen. You’ll be able to protect your credit by checking for these errors or mistakes and getting them fixed ASAP. If you do find an error, call the credit card company right away and let them know about it. It could also be a sign of identity theft or fraud, and if that’s the case, you’ll want to put a freeze and alerts on your accounts.

It’s standard practice to report your card as lost or stolen if you can’t find it or you think someone stole your account number. Be sure to do this immediately because time could be of the essence if it was stolen or is found and someone tries to use it. When you do this, your card issuer will deactivate your old credit card so no one else can use it. Always tell your credit issuer if there are purchases on your account that you know for certain you didn’t make.

By utilizing the above tips and information, you can be sure that you’re using your credit cards responsibly and wisely. You’ll build a strong credit history which will, in turn, boost your credit score, and having an excellent credit score can actually save you tons of money. You’ll receive low interest rate offers and other special discounts or “deals” because lenders will know your creditworthiness is exceptional.

Author: Lauralynn Mangis
Lauralynn is the Online Marketing Specialist for Advantage CCS. She is married and has two young daughters. She enjoys writing, reading, hiking, cooking, video games, sewing, and gardening. Lauralynn has a degree in Multimedia Technologies from Pittsburgh Technical College.

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