Credit cards have made buying things easy. When you don’t have cash on hand, all you have to do is hand over your card, get it swiped and voila! Your purchase is done.
The concept of credit cards is for you to have credit that you can use which you pay on or before the due date. But before you ever have a credit card, you would have to go through an application process and where your credit limit or your capacity to pay off your credit is deliberated.
While it’s fairly easy to get a credit card these days and it is as easy to keep using credit cards, proper usage is still a must so as to save you from incurring debt. This is because as you get carried away with using your card, you might go beyond your credit limit, and what’s worse is that you won’t have enough finances to pay off your debt by the end of the month.
To avoid those situations, here are a few tips on how to use credit cards wisely.
First of all, you have to know how much you can afford to pay and how much your credit limit is. It’s important to know these things because they will be your guide to wise spending. As a rule of thumb, you should just spend half of what you are earning and save or invest the rest. In this way, you can allocate your money well and you are sure that you have enough savings to pay off whatever it is you will be buying.
Secondly, be mindful of how much credit you have every once in a while. Like what was said earlier, you can be easily carried away with handing your credit card and swiping it. It’s highly recommended to list or to take note of all your purchases using your credit card.
Another tip is to avoid exceeding your credit limit. Never ever go past the credit limit as it reflects badly on credit companies. Moreover, you should also avoid maxing out your credit limit while you’re at it.
Last but not the least is to be responsible in tracking your transactions. This is to make sure that all purchases were made by you and no unnecessary expenses are being loaded to your card. An example of this is past loans that were being paid via credit card. You can do this by checking your credit report given together with your billing statement.
Having a credit card is easy and nice to have, but it also comes with a great responsibility. It isn’t supposed to be complicated because all you have to do is use it wisely, don’t exceed your limit, and then pay the bills on time. Sticking to these three things will actually save you from a lot of credit trouble.