Using a credit card responsibly seems like it should be pretty straightforward, yet every year huge numbers of credit card holders make mistakes that cost them money and damage their credit rating. While there are many great guidelines, tips and tricks for getting the most from your credit cards, there are 5 strict rules that you absolutely need to know to ensure that you use your credit cards in the most responsible way possible, which will maximize the benefit that you get from using them.
Rule #1 – Always Pay Your Bills Pay on Time
While this may seem like the most obvious rule, many people believe that paying your bills late and accepting a charge has no impact beyond a small fee. However, each late payment will go on your permanent credit file, and they will contribute to lowering your overall credit score.
Rule #2 – Pay Your Bills in Full
Many credit card holders get in the habit of only paying the monthly minimum required instead of the full amount owed. This classic error can quickly overwhelm people as the interest rate that is charged is high, and quickly compounds each month.
Rule #3 – Never Charge More in a Month Than You Can Afford to Pay
It is always tempting to splurge a little using a credit card, and then just tell yourself that you will cover the difference in future payments. The simple fact is that if you cannot afford to pay your credit card bill one month, then it will be even harder to pay it off in future periods, as the interest charge increases the total amount owed. Only charge what you can afford to pay, and save yourself from one of the classic pitfalls of credit card ownership.
Rule #4 – Avoid Charges by Reading the Small Print
All credit cards will carry a number of penalties and fees for actions like using the card outside of the country or using the card to withdraw cash. You need to know all these conditions to avoid surprise charges that can quickly add up in your amount owed.
Rule #5 – Check Your Statements
Unfortunately credit card fraud is a real problem that comes in many different forms. The best way to stay on top of fraud is to read your statement thoroughly each month to make sure that all your charges are accurate.
