How To Use Credit Cards Responsibly

By: Dror Klar

Most people who have credit cards either love them or hate them, but no matter which one you are, you have to admit that the cards can be useful as long as they are not abused. There are a few different dos and don'ts when it comes to having credit cards and as long as you know them, you should do just fine.

One of the first rules of having a credit card is to pay off the balance every month, if at all possible. Now, a lot people get to the point where they have to rely on their card for a month or two until they get back on their feet from being laid off or from being injured and unable to work, but in most cases, credit card debt can be almost completely attributed to abuse of the system. What constitutes abuse? Purchasing things that you would not normally be able to purchase, like an entertainment system, jewelry, clothes, and etcetera without actually having the cash to cover the cost. A great rule of thumb to follow is if you do not have the cash to cover a purchase, you should not make that purchase. It is very easy to let yourself get carried away and overextend yourself financially.

If you cannot pay off your card balance every month, you should realize that paying the minimum payment every month will not help you get the balance paid off for a very long time. It can take you a number years or even decades to pay off the balance on a credit card by paying the minimum payment. Avoid this at all costs.

Another thing that you should do is to be sure to make your payments on time. You do not want to be subject to the late fees.

Avoid getting a cash advance on your credit card if at all possible. If you have a credit card, you should also have a checking account and most checking accounts these days come with the option of a debit or ATM card. Use this for your cash needs because you do not have to pay interest on the cash you withdraw from your own checking account.

If you have to have a credit card, at least attempt to get something back out of it by having a card that gives you rewards for spending money with it. The reward cards are only good, however, if you are responsible enough to use the card all the time and yet, not allow yourself to get in over your head in credit card debt.

Also make sure that you know your card's benefits. Some cards come with traveler's insurance or rental car insurance, so keep that in mind when purchasing plane tickets or renting a car, since the insurance may only be valid if the entire cost of the trip or rental was charged to the card.

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