I’m a firm believer that credit cards are largely unnecessary in leading a financially secure life. If you can use a credit card wisely, then good for you, but 41% of Americans believed that and are now sunk in debt.
I recognize the benefits, yes, but I would rather save myself the hassle of trying not to fall for the disadvantages.
That said, there are some people who prefer using credit cards. If you are one of these people, or perhaps, thinking to be one of them, then you should know full well how to use a credit card correctly, or else you could end up with some debt, or even bad habits.
We all know horror stories of people who have used – and abused – their credit card to the point that it has already gotten them in deep debt, without them even realizing it!
Here are some dos and don’ts in using a credit card correctly.
Do take advantage of the perks
Most credit cards come with perks, like discounts and mileage points. If you’re big on travelling, get a credit card that will give you mileage points for every purchase.
If you’re often driving, or if you take long drives to work, get a credit card that will give you a rebate on your gas reloads. And if you like shopping and find yourself in sales more often than you are at home, get a credit card that gives you discounts for a certain percentage.
Assess how you live your life, and get a credit card that will suit that.
Don’t use your credit card for something you don’t have the cash for
Credit cards shouldn’t be thought of as a means to buy something that you can’t afford at the moment.
This is a very dangerous mindset to get into, as it will get you into a lot of trouble in the long run. If you fall into the habit of putting all your purchases into your card and thinking, “oh, I’ll pay it off at the end of this month, after payday,” it could have major repercussions for you in case an emergency occurs.
For example, what if you lose your job? How can you pay for your credit card balance? Or what if you or one of your family members get sick? How can you pay for your credit card balance?
If you think that a credit card is a way out of paying for things you can’t afford now, then it might be best that you don’t get a credit card at all.
Do pay off your balance every month
Credit card balances only earn interest if they aren’t paid at the end of the month.
Most credit cards now have an interest rate of more than 3% per month, which, believe it or not, can make your balance big pretty quickly. That’s why you should never use your credit card for something that you don’t actually have cash for.
Make sure to always pay off your balance every month!
Don’t just swipe without thinking of your limit
All credit cards have a credit limit, and this is something that you should always keep in mind. Try to keep your credit card purchases below 30% of your credit limit. Not only will it lead you to the road of good habits, it can also help improve your credit score.
So many people tend to think that sky’s the limit when they have a credit card, but that’s simply not true. It’s also a very dangerous mindset to get into that can lead your spiraling into a life of debt.
Don’t let your credit card own you. Know how to use your credit card correctly (and responsibly) and you’ll certainly reap its benefits and rewards without suffering from the consequences of irresponsible credit card usage!