Using your credit card responsibly
When you don’t see actual money changing hands, it’s hard to grasp the implications of swiping plastic. It’s important to understand that using a credit card is like having a loan. It’s borrowed money that has to be paid back. Here are some tips to becoming a savvy credit card user.
When faced with making a purchase, ask yourself if the item is something you need or want. If you don’t need it, and more importantly, you can’t afford it, then leave the item on the shelf. Also, don’t use your credit card as everyday “spending money.” You must be wise and show control over your purchases in order to build good credit.
Pay more than the minimum
When you receive your credit card bill, you will be shown a minimum payment due. This is the least amount you can pay to the creditor, but it is recommended that you pay more than the minimum or pay the entire balance off. If you make only the minimum payment, it will take you longer to pay off your debt and it increases the amount of interest you pay.
Make your payments on time
One of the convenient features of a credit card is the grace period. When you pay for something, you will have around 25 days before it has to be paid back or a minimum payment made. However, once the grace period is up, it is very important that you make your payment on time. Not only will you avoid a late payment fee, you’ll also keep your credit rating in good standing.
Stay aware of your balance
Waiting until your bill comes to see what your balance is can be a critical mistake. You can easily lose track of how much you’ve spent and may find yourself overwhelmed at the end of the month. Use online banking to monitor your account and stay on top of your spending.
Credit cards are a very convenient and useful tool for handling your finances. It’s a great way to build your credit history. As long as you manage your credit card wisely and keep your balance in check, you can enjoy all the benefits a credit card has to offer.