4 Ways To Use A Credit Card Sensibly
Wednesday June 3rd, 2015

Credit cards are part of everyday life. They provide you with a quick and secure form of payment for everything you may need, from groceries to gas. However, sometimes having a credit card can get a little out of control. Although a credit card can be a huge responsibility, it is also very important to building a high credit score. That credit score can help you apply for a mortgage, a loan, or even purchase a car. With credit cards being such an integral part of our lives, we wanted to share our favorite ways on how to sensibly use a credit card to help you improve your credit rating and prevent debt.

Pay Off Your Credit Card Statements in Full

One of the most important things you can do when you have a credit card is pay the statements in full. Resist just paying the minimum amount! Paying the minimum may sound like an easy fix, but paying just the minimum amount will mean more interest for you later. You can avoid paying interest on your credit card by paying the outstanding balance in full on each monthly billing cycle. As long as you pay off your balance at the end of every billing cycle, you’ll never have an interest charge and you can ensure you don’t accumulate any debt.

Never Skip A Payment

Your credit rating is an important factor when it comes to things such as applying for a mortgage or a car loan. Depending on your credit payment, lenders will determine how much money to lend you based on how much risk you pose to them. If you miss a payment, it could result in a late payment fee, a higher interest rate, or a negative mark on your credit rating – meaning lenders will be more hesitant to lend you money.

Use a Budget

Credit cards are also a great catalyst for creating a budget for yourself.By making all your purchases on your credit card, you can see exactly how much you’ve spent at the end of every month and what kinds of purchases you made. However, make sure your credit card spending doesn’t get out of hand. Remember to never charge more to your card than what you can pay off at the end of the month.

Use a Rewards or Store Card

If you’re using a credit card for the majority of your purchases, make sure you use a card that offers rewards. If you shop at a particular store often, like Target for example, look into getting a store card. Store and reward cards are great because you avoid paying interest on your purchases if you pay off the balance every month, but you can also earn rewards such as cash, airline miles, or retail points.

There are plenty of ways to responsibly use your credit card. But by practicing these sensible tips, you will not only improve your credit score, you will also eliminate the risk of racking up credit card debt!