woman using credit card

15 Dec Best Practices for Using a Credit Card Responsibly

Many of us—especially young adults—are afraid to make the switch to a credit card because of the possibility of accumulating credit card debt. Still others who already have credit cards use them with little regard as to how accumulating debt and/or building credit will affect them financially. The fact is that credit cards are almost essential for building a credit history (which comes in handy when applying for any type of loan), and using a credit card strategically can truly be beneficial to your financial stability. Because many people are unaware of how exactly to use a credit card wisely, here is a primer on best practices to keep in mind when using a credit card.

Pay off the entire balance each month.

Your credit card bill will outline what your minimum payment for that month is, but you should really aim to pay your credit card bill in full every month. Otherwise, you’ll only have to pay that money back in the future, plus more due to accumulated interest. Paying off your entire balance each month ensures that you’ll remain debt free and prevents your finances from getting out of hand.

Pay on time.

In addition to paying off your entire balance every month, you need to make sure all of your payments are in on time. This will help you avoid late fees, and it’s an easy way to build your credit. The payment due date may change from month to month, so be sure to always check your credit card bill.

Only buy things you can afford.

If you’re used to using a debit card, then you should be used to using plastic with this mindset Be sure to only buy things with your credit card that you’ll be able to pay off at the end of the month.

Stay within your limit.

Most credit cards come with a prescribed limit, which is the highest balance that you can have on your credit card at any given time. If you ever go over this limit, you will be changed a large overdraft fee, and your interest rate will likely be raised. Therefore, you should always be mindful of what the current balance is on your credit card so that you can stay within the limit. Many financial experts recommend keeping your balance below 70% of your credit limit in order to show lenders that you can control how much credit you use; that way, you’ll have credit available in the event of an emergency.

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