How to Use Credit Cards Responsibly

Most adults have at least some experience with credit cards, whether it be positive, or negative. The best way to make sure that your experience with credit cards in the future is satisfying is to understand how to use credit cards responsibly.

This simple means equipping yourself with knowledge on what credit cards are and how to use them wisely.

Therefore to learn more about using credit cards responsibly, take advantage of the tips in this article, and you will be able to build the sort of happy relationship with credit cards that you may not have known before.

Negotiate High Interest Rates

If you are not satisfied with the high interest rate on your credit card, but aren’t interested in transferring the balance somewhere else, try negotiating with the issuing bank.

You can sometimes get a lower interest rate if you tell the issuing bank that you are considering transferring your balances to a different credit card that offers low-interest transfers.

They may lower your rate in order to keep your business!

Be dubious of zero percent teaser rates. The grace periods where these take place can lead you into the trap of being overly confident and spending too much.

Know what the go-to rate is going to be and when it kicks in. Have some idea what your likely balance will be at that date.

 

Refrain from Giving a Child a Credit Card

It is wise to refrain from giving a credit card to a child. It is best to let children wait to get credit cards until they reach the age of 18, or when they can get their own.

Instead, consider opening them a checking account and giving them an allowance.

This will help them learn to manage a small amount of money so that they will be ready to manage a credit card when the time comes.

Keep in mind, you can always add a teenager to your credit card without them having access to the credit card.

This is called an ‘authorized user‘ and you can have multiple of them on your credit card.

This is a great way to actually start building a credit profile for them.

An excellent credit profile will serve your authorized users greatly when they are ready to start adulting.

 

Proper Repayment

The key to using a credit card correctly lies in proper repayment.

Every time that you don’t repay the balance on a credit card account, your bill increases.

This means that a $10 purchase can quickly turn into a $20 purchase all due to interest! Learn how to pay it off every month.

If you are not able to pay the full balance off each month then be sure to pay at least the minimum due by the due date on your statement.

There are no grace period for payments when it comes to credit card.  If not paid by the due date then you will incur a late fee. Still pay your balance due as soon as possible. A late payment that is more than 30 days will affect your credit profile adversely.

 

Credit Card Utilization  (How to Use Credit Cards Responsibly)

Utilization refers to the balance that you carry on your credit card each month in comparison to the limit of that credit card.

The rule of thumb is to use no more than 30% of your credit card limit.  You should always aim to never use the full credit limit that you are allowed. (Even though they gave it to you:))

You should always leave available credit on your credit card. Keep in mind that you will be paying for more than you use by way of interest and finance charges.

This indicates to future Lenders that you are not using your credit card to pay for debts.

Which in returns opens up more favorably credit options for you in the future.

 

Check for Errors

It is very important that you save your credit card receipts. You need to compare them with your monthly statement.

Companies do make mistakes and sometimes, you get charged for things you did not purchase.

So make sure you promptly report any discrepancies to the company that issued the card.

 

Balance Transfer Options

Look into whether a balance transfer will benefit you. Yes, balance transfers can be very tempting.

The rates and deferred interest often offered by credit card companies are typically substantial.

But if it is a large sum of money you are considering transferring, then the high interest rate normally tacked onto the back end of the transfer.

This  may mean that you actually pay more over time than if you had kept your balance where it was. Do the math before jumping in.

 

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Bottom Line

It is not uncommon for people to have a love/hate relationship with credit cards.

While they relish the sort of spending such cards can facilitate, they worry about the possibility that interest charges, and other fees may get out of control.

By internalizing the ideas in this post, you will be able to get a strong hold of your credit card utilization and build a strong financial foundation.

 

Do not forget to leave us a comment, and be sure to share this information with your friends and family.  I am sure they will find appreciate you for the valuable content.

 

Cheers!