Handling Your Credit Card ResponsiblyJanuary 23, 2014
A credit card is a handy financial tool to have but the thought of going into extreme debt because of the abuse of the credit can be a turn off for some people. The trick to owning a credit card is not to be overwhelmed by the available limit for each card but to still live frugally within your means. Here are some ideas on how you can handle owning a credit card or two but being responsible enough about it.
The number one rule to being a responsible credit card owner is not to use the credit card for basic necessities. Often times, a credit card should only be used for emergencies and paying for your groceries and clothing should be made with cash because these are items that aren’t considered emergencies. Your budget should already include these items and having a credit card is not a license to purchase items that should be purchased regularly.
Having a credit card and making purchases with it means you have some leeway when paying for the said purchases. However, this should not be a reason for you to delay payment or not to pay for the whole bill in full when the due date arrives. That is not being responsible. When you don’t pay the full amount on the due date, you are risking getting further into debt because you’re adding a hefty interest rate on your unpaid balance and this will make it even harder for you to pay for the rest of the balance in the future.
One way to stay on top of your payment schedules is selecting the “Auto Pay” option which is usually offered by credit card companies. Your account will automatically be debited the amount you need to pay and you no longer have to worry about it once it’s set up. The only thing that you should remember is that your account has enough balance in it to cover whatever will be debited to pay for your credit card purchases.
One key practice that you should never forget when you own a credit card is to look at your statement with an eagle eye to make sure that there are no fraudulent charges being made on your account. Once it happens, it can happen another time and you wouldn’t want that on your record.
Every once in a while, you should evaluate the functionality of your credit cards, especially if you have more than one. Each credit card may satisfy specific needs that you yourself don’t want or have never used up. There are credit cards that offer rewards programs and it is up to you to determine whether you’re still interested in using these rewards for yourself. Some of these credit cards charge an annual fee for their membership and this may be a waste of your money if you don’t even use these perks. Try and evaluate your recent purchases and see if you have any particular preferences for car rentals or hotels or airlines as these are the most common types of products that offer rewards programs for credit card owners. Make sure that your rewards don’t end up expiring on you and make sure that you can use them as soon as you’re able.
If upon evaluation of your credit cards, you feel that there are some which you no longer favor or use, then it may be time to let go of them. Of course, there will be a short dip in your credit rating when you close down a credit card account but if you think that it will be better for you in the long run then it’s a decision that you have to live with.