Using Your Credit Card Properly

By Leni Parrish on January 25, 2010

Nowadays, the credit card is a very convenient way of payment. To avoid being caught up in a bad credit situation, there are a few things you can do to properly use your credit card.

First, avoid using your card in making purchases where a cash payment is possible. When using a card, the tendency is that you will purchase items that are unnecessary and beyond your budget. If it is possible, pay for the expenses that you incur for the day using available cash.

You should also make a full payment of your credit card balance at each due date. Holders of credit cards tend to pay only a portion of their bills. To avoid problems, only charge payments in your credit card that you can afford to fully pay back.

Pay on time consistently. It is really important that you pay bills on time. If you miss a single payment, you will already be charged an interest for your debt. Avoid the habit of missing due dates for payments so you will not be caught up in problematic situations.

Use a credit card that has low interest rate. Before using one, make sure you are using the right card. Remember to always choose one that has a lower interest rate even if the other ones offer more perks and benefits. If transferring balances is not a priority, then go for a credit card with a low interest on your purchases. There are cards that offer 0% interest on transfers only. Also, note that the introductory offers of these companies are only short-term. Choose a credit card that will offer reasonable fees on a long-term basis.

Another thing to remember is to find a card that will give you an ample grace period in paying back your debt to avoid interest payments. Ideally, the grace period should be around 30 days.

Do not use your credit card to make cash advances. There are credit cards that can also be used as debit cards. What this means is that you can use these to withdraw money from the ATM. Be careful because cash advances do not have a grace period so you will be charged with interest immediately after you have withdrawn money.

If possible, try not to have multiple credit cards at your disposal. You only need one to help establish good credit and provide convenience when you make payments. Do not go beyond the credit card limit. Financial consultants suggest credit card users to only use 50% of their credit card since exceeding the limit translates to paying more rates.

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