Many people that have a credit card have no clue how to use their credit card correctly. They get into financial trouble because they do all of the things that you are never supposed to do with a credit card, such as charge to the maximum while paying the minimum. To avoid the financial devastation that can occur with incorrectly using your credit card, you should learn the basic rules of credit card use and stick to these rules as much as you possibly can. Here are some tips and rules on how to use your credit card wisely.
Choose Your Card Carefully
One of the biggest mistakes you can make with a credit card is choosing a care solely based on the immediate reward you get when you sign up for the card, such as a free t-shirt or a percentage off of your first purchase. Different credit cards have different fees, features, and interest rates, so it is important to examine the terms and conditions of the credit card to ensure that you know how much you will be paying to borrow money through the credit card. If the interest rate is high and there are many fees associated with using the credit card, it is best to continue your search until you find a credit card with better terms.
Watch Your Debt Levels
Allowing your debt levels to grow on your credit cards is a quick way to get into financial trouble. As the balance becomes higher, you are paying more and more in interest each month, making it more difficult to pay off the balance of the card. In time, the payments may become unmanageable and you may find yourself facing default or bankruptcy. Try to pay as much as you can on your credit cards as often as you can to make your balances as small as possible.
Make Payments On Time
You should do whatever you can to ensure that all of your credit card payments are made on time each month. Making a payment late can result in a number of consequences, including an expensive late charge, an increase in the interest rate for the credit card, and a reduction in your credit score. Try to pay at least the minimum amount due as soon as the credit card bill arrives to make sure that the payment is always made before it is due.
How do you use your credit card wisely? We would love to know.