Tips to Use a Credit Card Wisely
How to Use a Credit Card Without Going Into Debt
Credit cards come with a bad reputation.
When you see reports of Canadians racking up a total of $100 billion in credit card debts, you can understand why people are cautious.
In many ways, they are one of the biggest debt traps out there.
It’s surprisingly easy to fall into credit card debt and keep adding to it.
Nevertheless, most people with credit card debt are guilty of making bad decisions.
Therefore, it’s not the cards themselves that are the issue, but how you use them.
When used properly, credit cards present many benefits.
Mainly, you can build your credit rating, which helps you apply for mortgages and other loans.
Keeping this in mind, here are our top tips for using a credit card responsibly:
Pay your balance in full
The biggest credit card error is making minimum payments each month.
Credit card companies give you this option so you can make a payment without paying for your full bill.
It’s designed to help people who can’t afford the total bill each month.
The problem is this triggers your card’s interest rate, adding to what you owe.
It’s a surefire way to increase credit card debt if you keep making minimum payments each month.
Instead, pay your balance in full, and you will never have to deal with interest rates.
Make one or two purchases a month
Having a credit card and not using it is pointless.
You won’t see any of the benefits!
But, using one too frequently can be damaging.
Firstly, if you use up all of your credit, it damages your credit rating.
Not to mention the fact that this leads to a massive monthly bill, which you might be unable to pay.
As such, you end up in the situation explained previously, making minimum payments and gaining interest.
If you buy one or two things every month, you will see the benefits of a credit card.
It shows that you don’t rely on all the credit you have access to, which improves your credit score.
It also keeps your bill low, ensuring you can pay it off in full.
Our advice is to pay for gas on your card or set up a direct debit for something like Netflix or your gas bill.
Only use one credit card
The moment you have more than one credit card is the moment you end up in trouble.
There is simply no need for you to have multiple cards.
It tempts you to spend more money, and you can easily rack up debts on both cards.
All you need is one card with a credit limit that’s easy to manage.
Your limit should be small enough to avoid temptation spending, but high enough so your monthly purchases don’t use it all up.
With these three tips, you will start seeing the benefits credit cards bring to the table.
They will also help you stay clear of credit card debt and prove that you’re a responsible borrower!
Get credit counselling from debt-relief experts
If you’re interested, we offer a credit counselling service for anyone in need of extra help.
We will teach you about credit and help you sort out any credit issues you may have.
Alongside this, we also offer more debt-relief services to help you gain control of your financial situation.
To set up a consultation, either call us or fill in our online evaluation form.