Why You Should Define Your Relationship with Credit Cards

Credit cards, like any other relationship, involve a certain amount of “give and take”. These handy financial tools provide convenience and flexibility, enabling you to acquire goods and services promptly with the promise of future repayment. But just as you manage your other relationships, it’s critical to understand why you should define your relationship with credit cards.

Preparing for a Credit Card Commitment

Before you plunge into the credit card world, it’s crucial to consider a few things.


Understanding your spending habits is paramount. If you’re prone to excessive spending, a credit card with a lower limit may be the best choice. This can help control the “spend now, worry later” mentality.

Setting Guidelines

Establish rules for how you’ll use your card and plan your payments. Timely payments contribute positively to your credit history. Ensure you have the necessary funds to pay off the card or at least make the minimum payment at the time of purchase. Use tools like phone reminders or calendars to keep track of payment due dates.

Selecting Credit Wisely

Exercise discretion when choosing credit. Limit the number of cards you possess. Consider whether you need more than one card. Be cautious when completing department store surveys or shopping for credit as too many inquiries on your credit report may negatively impact your credit score.

Comprehending Associated Costs

Know what costs come with your card. Are there monthly or annual fees? How is the interest charged? Take into account your spending plan and how the credit card payments, interest, and even rewards program fit into your budget and financial goals.

Understanding Your Credit Card Type

It’s essential to know which kind of card best suits your needs, budget, and credit score.

Everyday Credit Cards

These are from banks, financial institutions, and credit card companies, and they help you build or rebuild credit.

Secured Credit Cards

These require a security deposit as a safeguard against non-payment and can help build or rebuild credit.

Debit Visa or Mastercards and Prepaid Credit Cards

These cards are loaded with your money, and since there’s no borrowing involved, they don’t contribute to credit building.

If your goal is to build or rebuild credit, consider getting an everyday or secured credit card. If you’re a big spender but want to control your spending, prepaid credit cards can be an effective budgeting tool. If you aim to earn rewards from your spending, credit cards with cashback or travel rewards can be beneficial. However, their annual fees and interest rates might be higher, so research or consult a financial advisor to find the best card for your needs.

Practicing Safe Credit

While the allure of a new credit card relationship can be enticing, the risks should not be overlooked. Safe credit practices not only enhance your credit score but also set the foundation for your future financial health.

Understanding Credit Card Functionality

Being familiar with how credit cards work gives you an advantage when deciding how best to use your card.

Timely Full Payments

Aim to pay your credit card charges in full every month before the due date to avoid interest charges. If you can’t pay the full balance, ensure to pay at least the minimum monthly payment by the due date.

Avoiding Cash Advances

Try not to take cash advances on your credit card unless it’s an emergency. Interest begins accruing from the first day, and it can add up quickly.

Limiting Charges

Never charge more to your card than you can comfortably afford to pay off in full.

Monitoring Your Spending

Keep track of your credit card spending through online banking, a mobile app, or by manually maintaining a budget. If you notice detrimental changes in your habits, it may be time to reassess your relationship with your cards.

Recognizing When It’s Time to Let Go

Sadly, not all relationships are healthy, and this includes your relationship with credit cards. It might be time for a financial self-check if you notice behaviors like:


  • Consistently paying only the minimum balance on your card (or not at all).
  • Accumulating overdue payments.
  • Using one credit card to pay the balance on another.
  • Receiving or ignoring calls and messages from collection agencies.
  • Negatively impacting your credit score because of your relationship with your card(s).


If you’re worried about how your relationship with credit is affecting your finances, consider reaching out for a free and confidential debt consultation. Licensed Insolvency Trustees can help you navigate your way out of an unhealthy relationship with credit cards and find the best solution for your debt problem.

Understanding why you should define your relationship with credit cards is a vital first step towards financial freedom and responsible credit card use.

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