If you have a credit card, it is essential that you use it the right way. If you don’t, not only will your credit score suffer, but you could find yourself in a great deal of debt. Having a credit card is a big responsibility, and it should not be taken lightly. Therefore, whether this is your first credit card, or you have had one for years, there are certain “best practices” you should follow in order to ensure that your credit card is being handled the right way.
The first rule to follow is to never put more on your card than you can afford to pay off by the end of the month. Ideally you should be using your credit card to purchase things that you need today, but can’t afford to get for another few days. Maybe you are getting paid on Friday but you really need to purchase something on Tuesday. In this case you would put it on your credit card, and pay it off when you get paid again. If you start putting a ton of charges on your card, with the assumption that you’ll just pay it off whenever you can, you’ll quickly fall behind, interest will accumulate, more charges will get put on your card, and you’ll owe a ton of money with no way of paying it off.
The second rule is that if for whatever reason you are unable to pay your balance at the end of the month, pay at least a little more than the minimum owed. If you only pay the minimum, this will basically just cancel out any interest charges without putting a dent in the principle amount. Even just a little bit more than the minimum can really help you to pay down any credit card debt, so pay as much as you can afford.
Third, if you do maintain a balance on your card, try to keep it under 30 percent of your credit limit. Keeping the amount you owe small will help your credit score in the long run. If you constantly owe a lot of money on your card, it reflects poorly on you, and will dissuade potential lenders in the future. So remember, the less you owe, the better.
Our fourth rule is to use your credit card regularly. This doesn’t mean spending a fortune on it each month, but rather putting small items on it that you can pay off at the end of the month. This will allow you to build up a proven credit history, showing that you can responsibly use your card and pay off the balance too.
The last rule is to avoid things like cash advances, late payments, and convenience checks. All of these things come with additional fees, and should be avoided when possible. As long as you can properly plan ahead, you should have no trouble avoiding these extra fees.
Follow the rules above and your credit card will be just fine. You’ll be able to keep yourself out of debt and maintain a good credit score. Just remember that managing your credit card is all about being responsible with your spending, paying it off on time, and not going overboard. If you can do this, you will be good to go.