How to Use Credit Cards Responsibly

Find out how to use your credit card responsibly so you don’t add to or fall into debt.

Many people have a negative perception of credit cards.  They fear their ease of use and its temptation to purchase more than what they can afford.  However, there are ways to use a credit card effectively so that you don’t have to fear its use or overspending.

Ignore Your Limit

When you are approved for a credit card, the first thing you find out is how much you’ve been approved for.  This limit is the amount that the credit card company trusts you will be able to pay back if you indeed use all of it.  However, this amount is also how much they would like you to spend because if you can’t pay it off in one month, they will charge you a finance charge or interest.  This is how the credit card company makes money.  Therefore, instead of giving a credit card company your hard-earned money, forget about the limit.  You should never see your credit card as a large sum of money in your pocket.

Pay For What You Buy

One of the reasons why people sign up for credit cards is because of its convenience.  It’s much easier to carry around a money card rather than going to the ATM or running the risk of losing cash.  However, while a card may not look like cash, you should treat it as such.  If you are a financially responsible individual, you should know how much money you have in your checking and savings account.  When you choose to purchase something with a credit card, deduct that amount from one of your accounts and at the end of the month, take out that money to pay your credit card off.  This way, you have the convenience of card as well as the control over only spending as much as you have.

Pay attention to your shopping personality.  If you tend to overspend when you are angry or really happy, leave your credit card at home.  Impulse buying due to your emotions will only propel you into a pool of debt that you may not be able to get out of easily.

What are some of your tricks with using credit cards responsibly?

(Photo Credit: http://www.flickr.com/photos/zoovroo/3025062786/)

June 3rd, 2009 by Marcelina Hardy | Posted in Credit Cards, Debt Management | (0)