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The Do’s and Don’ts of Using a Credit Card

The Do’s and Don'ts of Using a Credit Card

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Advance Personal Finance

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A credit card, being a useful financial instrument is becoming pretty popular nowadays especially among the young adults. Credit card usage can dramatically help boosting your financial life while offering you several ancillary benefits. This includes a good credit score, cash back rebates, frequent flyer miles, additional value to your daily shopping, and many other rewards. However, if it’s misused, it can cause serious financial blunders. For example, bad credit, unpayable debt, and so on. You have to be utterly cautious and careful in order to ensure a proper credit card usage. Here’s a useful article, “The Do’s and Don’ts of using a credit card” that encourage healthy spending habits for new users and credit card users who have experience.

The Top Five Things You Should Do

1.Pay Your Bills Regularly – Missing your monthly deadline or due date simply leads to further financial trouble. It’s recommended to pay your bills on time in order to avoid a late payment fee. This can severely hit your credit score if not done. However, if you miss your payments, contact the creditors immediately and explain your situation so that the late fees can be waived.

2.Stay Within 30% Of Your Credit Limit – This will eventually help you to maintain a good credit history. Plus, lower balances are much easier to manage than those which are insanely higher.

3.Use Your Credit Card Responsibly – Make sure to use your credit cards responsibly. Make wise decisions about purchasing items that you actually need. Be sure to recognize the things which you really need and the ones which you just want.

4.Don’t Just Pick Any Credit Card – Consult with an expert in order to understand what options are available. Then understand the variety of roles your credit cards can play in your wallet. Remember to pick a credit card which offers the lowest annual interest rate.

5.Check Your Monthly Statements – Make sure to thoroughly review your monthly credit card statements on each and every month. Make sure that everything mentioned on your monthly statement is accurate. Read through each and every transaction in order to ensure that everything is correct. For example, that the last payment was done correctly, you were charged the exact amount for all of your purchases and there were no transactions that you didn’t authorize.

The Top Five Things You Should Not Do

1.Don’t Apply For A Credit Card Without Reading Its Terms And Conditions  – Credit cards come with various regulations, terms and conditions. You should properly evaluate the credit cards based on their fees, respective interest rates, cash backs, and other rewards. However, you should never pick a credit card without reading its terms and conditions.

2.Don’t Spend More Money Than You Can Afford  – More precisely, credit is a loan which has to be repaid on time. It’s your utmost responsibility to manage all your debts and keep your commitment with the lenders. So avoid reaching your ultimate credit limit or “maxing out” your credit cards.

3.Don’t Use Your Credit Cards Just To Make Everyday Purchases – You should not purchase items like clothing, gas, and food using a credit card. Don’t use your credit card merely as a substitute for cash as it can quickly lead to debt. For such ordinary purchases, use a debit card or cash while leaving your credit cards in your wallet.

4.Don’t Share Your Credit Card Number – You have to be completely aware and alert in order to identity theft and phishing scams which may ask for your credit card numbers. Never give out your credit card number or any other personal information to others.

5.Don’t Ignore The Warning Signs Of An Upcoming Credit Trouble – If you pay just the minimum balance or pay late to fund your daily living expenses, then soon it will impose you a bad credit history. This might bring you in the “credit” danger zone. In such situations, talk to an expert financial counseling organization in order to regain control of your finances.

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