10 Tips on Using Credit Cards Responsibly
You’ve likely heard that using a credit card can be dangerous, especially if it enables your spending to get out of control. However, there are many benefits to credit cards too, as long as you use them responsibly. Below are 10 ways to do just that.
1. Don’t Apply for Too Many Credit Cards
Using credit cards responsibly means not having too many of them. If you apply for several credit cards and get approved, it can be tempting to spend once you have all of that available credit. Start slow and do your research to find a credit card that’s right for you and try not to be excessive about the number of cards you have.
2. Don’t Keep a Balance on Your Card
There is a myth that you should keep a small balance on your credit card in order to improve your credit score. However, leaving a balance on your card could cause you to incur interest fees and charges that you don’t want to pay. Always pay your cards off in full each month.
3. Make Sure Your Card Has a Chip
Credit card chip technology is relatively new, but most credit card companies are moving towards it. Chip technology is supposed to make your credit card much more secure, so make sure the credit card you’re using regularly has one.
4. Check Your Credit Report Every Year
Every year you are entitled to a free credit report at AnnualCreditReport.com, which pulls your credit history from each of the three credit bureaus. This is important to do because you need to check your account history for accuracy and make sure there hasn’t been an identity theft or fraud. You can view your score for free here at LendingTree.
5. Don’t Spend for the Points
Many credit cards offer a wonderful array of points that can be used for purchases or for travel. However, don’t spend just to get the points. The points should be a bonus after the purchases are made, not an incentive to make purchases.
6. Check Your Account for Errors
When you go to pay your credit card bill, always check for errors. Don’t mindlessly log in, make your payment, and log out. At the end of each statement, carefully go through everything and make sure that every payment was yours. Check for fees as well.
7. Avoid Store Credit Cards
In an extensive survey conducted by CreditCards.com, their research showed that store credit cards often carried higher APRs than your average credit card, sometimes as high as 28.99%. While it might seem like a good deal to get a big percentage off your purchase in the checkout line, avoid it. If you have trouble paying off your balance in full, the interest rate can really hurt you.
8. Don’t Give Credit to Others
You might notice that in some cases, you can give someone a duplicate credit card of yours in their name. Many parents do this for their children who are going to college, but you should never do this for a significant other or a friend. The reason is that if they abuse your credit, you will still be responsible for it, not them.
9. Set Up Automatic Payments
If you’re worried about being late with your payments, you can always set up your cards to automatically pay the minimum each month. Then you can log into your account and pay the rest once you get the chance. This ensures you don’t get hit with late fees.
10. Enjoy the Convenience
The last tip to use your credit cards responsibly is to enjoy the convenience but just don’t go overboard. Credit cards are a great way to conveniently buy what you need without having to carry around a lot of cash. By following the tips above, you can use them for this purpose and avoid getting into financial trouble with them.