How To Be A Responsible Credit Card User

by Donia Varghese
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How To Be A Responsible Credit Card User

Not making card payments on time can impact credit history and rating (Image courtesy:

Credit cards can be a blessing or a curse depending on how we use them. More often than not, young people are enticed by the buy- now-pay-later concept and are either confused or unaware of the risks associated with credit. Paying off a student loan is hard enough and credit card debt only adds to the pressure. Some of the common credit card mistakes can be avoided if you learn how to use your plastic wisely.

Fight the temptation: A credit card gives you the power to buy anything you wish whenever you want if it is within your credit limit. Since it does not immediately affect your bank balance like debit cards do, you may not feel the impact of your decisions until it’s time to pay the bill. Use your discretion and buy the things you need and really want. Making a list of essential items enables you to prioritize your needs and stick to them. Pause and think about why you are buying an item before swiping your card and think of the other things you may not be able to buy because of your purchase.

Have a budget: Credit cards are of course convenient but you should view all the purchases you make – be it using cash, debit or credit, as chipping away at your budget. In order to avoid financial hardships and ensure you save up for long-term goals, having a simple yet realistic budget is a good idea. Know how much you have to spend on essentials and how much you’d like to save. Then at the end of the month, you can go through your expenses to make sure your finances are under control and ensure that the money you spend on discretionary items won’t have a negative impact on your budget.

Pay off your monthly balance: If you view the spending on your credit card as an extension of your budget, then you should be able to pay off your credit card balance every month. On the other hand, it is easy and tempting to pay the minimum balance. It is smaller and manageable and leaves you with much more to spend in the short term. In the long term, the compounding effect of high interest on credit cards (often in the 20% range) results in you paying much more than the initial price of the item. Apart from not being affected by credit card debt, paying your balance in full also enables you to make new purchases by leaving your credit limit open.

How To Be A Responsible Credit Card User - Fresh Print Magazine

Planning a budget is a good way to manage your finances (Image courtesy:

Pay on time: You will be charged a fee each month your payment is late and if this happens on a regular basis, it will have an adverse impact on your credit history and rating. A low credit score can make it harder for you to get a loan, an apartment or even certain jobs that expect you to have a good credit history. So make sure your bills are not ignored and are paid on time.

Check for accuracy:  We often think that everything on the credit card statement is 100 per cent accurate but this may not be the case every time. Instead of tossing them aside, make sure you review your credit card statements for discrepancies or unauthorized transactions. You can do this by saving your receipts and comparing them with your credit card statement.

Pick the right credit card:  Do your research and make use of online comparison sites to choose the best credit card suited to your needs. Each card is different and most of them offer certain benefits and promotional offers. You might as well maximize your benefits from the purchases you make.

Protect yourself from yourself: If you find that you have trouble controlling your spending, leave your credit card at home and use cash or your debit card. It is also best to avoid increasing your credit limit to higher and more tempting levels that make you buy expensive things you don’t really need. It is also a good practice to sit back and think about your purchases and whether you really got value from them.

A credit card is a wonderful thing to have and can make life easier if you learn to use it responsibly and manage your finances effectively but can also rack up a lot of debt if you’re a careless credit card user.

If you have any tips on smart handling of credit cards, feel free to share them with us in the comments section below or by tweeting @FreshPrintMag.

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