Five Tips for Using Your Credit Cards Wisely

Credit cards do not have to be evil. However, it is vital to use them responsibly so you do not get into financial troubles.

Credit cards can be a great addition to your wallet. If you know how to use your credit cards correctly and pay them off at the end of each month, you are a responsible spender. Unfortunately, many people use their credit cards in such a way that they go deeper in debt until they reach a point that seems impossible to recover from. Here are some useful tips to help you use your own credit cards responsibly.

Credit Cards are NOT Free Money
The opposite of this statement is true. Credit cards are not free money, but rather expensive money. If you do not pay off your credit card balance at the end of each month, you are going to pay interest on that balance (unless, of course, you are under a promotional plan in which you have zero percent interest for a period of time). The interest on your balance continues to accrue until it is fully paid off.

Limit Yourself
Many American households have at least eight credit cards in their wallets and purses. This is not a good idea because there is simply too much temptation to spend and charge on all eight cards. This not only makes it more difficult to keep track of the money you spend, but it also runs up your bill to where you cannot pay them all off at the end of each month. Limit yourself to one or two credit cards to avoid temptation and financial dangers.

Keep Track
Some people get into debt troubles because they do not keep track of how much they are spending. When you just “put it on the card,” you forget about how much you spend throughout the day. The day turns into a week and then the weeks turn into the month until you receive the monthly statement. Keep a little notebook with you to write down how much you spend or keep the receipts throughout the day and record them in a logbook at the end of each day. This will help you notice where your money is going and it can help keep you under control when it comes to buying things with your credit cards.

If You Can’t Afford It, Don’t Buy It
Credit cards might seem like the perfect way to buy stuff that you cannot afford. But that mentality will put your into debt fairly quickly. Credit cards should be used in emergency situations and only if you can pay off your balance at the end of each month. When you use them this way, you will be a responsible spender.

Track Your Credit History
In order to make sure your credit score is accurate, you should check your credit history through the three major bureaus at least twice a year. This will tell you if there are any unauthorized accounts in your name and if the credit agencies have been reporting your payments accurately.

Follow these five tips for using your credit cards wisely and you will be ahead in the financial game!

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