Credit cards offer a flexible way of paying for items without having to walk around with huge chunks of cash. However, the convenience can come at a cost if one is not extra careful. Used irresponsibly, credit cards can plunge one into a financial meltdown surrounded by long-term toxic debts.
While credit cards don’t come with a manual, it is important to use them the right way to build a solid credit score and avoid devastating effects of credit misuse. Below are some of the right ways of using a credit card.
Avoid Maxing Out
One of the biggest mistakes that people make is maxing out their credit card limit. Credit cards are not for buying everything just because one has a higher credit limit. With a credit card, it is important to make small charges that one can clear with ease.
Only make bigger purchases if you have a clear plan on how you will pay back the money. Keeping credit use as low as possible; 30% of the credit limit should be the ultimate goal.
Pay Your Credit Card On time
Paying off credit card on time should be a no brainer. This is the only way one can maintain a higher credit score. Paying on time helps one avoid extra interest charges or hefty late payment fees that can be quite burdensome.
Some people set up a direct debit to pay of a fixed amount off, the balance of a credit card as a way of clearing credit card debts. It is also important to maximize credit card payments each month to avoid unnecessary interest charges.
Check Statements Frequent
Credit cards are prone to theft. It is thus important to check card statements regularly to ensure one is paying only for amounts spent. If you do not check your statements, you could end up paying for things you never bought or fraudulent fees.
Most credit card companies allow people to view their activity online. This way, you can keep track spending, make adjustments where necessary in case of overspending.
Self-discipline is the only way one can be able to use a credit card in the right way. Start with only one credit card, keep track of spending, and be ready to make adjustments where necessary.