Credit cards can be valuable if you know how to use them properly. On the other hand, using credit cards irresponsibly will lead to loads of debt. But, if you want to use credit cards the right way, follow these tips to make credit your best friend.
Pay Your Bill in Full Every Month
If you don’t want to be like the “average American,” stay out of credit card debt altogether. This means using your credit for only what you can afford and paying your bill in full every month. Doing this can be challenging, but it’s the number one rule of using credit cards. This is truly the only way to avoid getting into debt.
Never Pay Your Bill Late
Along with paying your bill in full, you must also make sure to pay your bill on time. Most credit card issuers charge an expensive fee, often up to $39, for a late payment. Since your credit score is based on your payment history, a missed payment may really affect your score.
Log Into Your Account
Credit can be easier to use than cash because it creates a paper trail. If you use credit for all your purchases, you don’t have to keep receipts for stuff like grocery and gas purchases. Instead, you could just log in to your account online to see where you spent the money, how much you spent, and how much you have left.
Use Your Credit Card as A Complement to Your Budget
If you’re disciplined, you could use a credit card as a complement to your budget. This strategy involves creating a written budget and using your credit card for purchases until you work towards your predetermined spending limits. This is an awesome way to earn rewards for purchases you’d be making anyway.
Know Your Limits
If you’re concerned that you might overspend, ask your credit card company to reduce your credit limit to something you’re confident you can manage on a monthly basis. Most of the time, they’ll be more than happy to oblige, since they want you to pay the money back.
