Whether you’ve experienced credit card issues in the past or are just starting with your first one, you may be wondering how to use credit cards wisely.
Having a credit card is not only an incredible convenience in life, but it is also something you can use to build your credit.
As you prepare to begin using a credit card, here are some principles to stick with that will help you use them wisely.
Set Up Automatic Payments
It doesn’t matter what type of credit card you get; you’ll have options for paying your balance. One option is setting up automatic payments, and this is the smartest choice to make.
Setting up automatic payments each month will ensure that you avoid missing your payments, which will also help you avoid paying late fees.
You can set this up by logging into your online credit card account. When you set it up, choose to pay the full balance owed every month by the due date.
Use the App
Almost every credit card company offers an app you can download on your smartphone. When you use the app they offer, you’ll reap benefits. Here are a few:
- Get alerts each time you use the card to keep control over your purchases
- Set up payment methods
- Track spending habits
- Access to your credit score (this is not available with all credit cards)
As soon as you get the card, set up the app on your phone to take advantage of these benefits.
Charge Only What You Need and Can Repay
One of the best rules to set with your credit card is to use it only for things you need and only when you can repay it the balance in full. You should avoid using it for luxury or spontaneous purchases unless you have a plan to pay the balance in full.
You should also avoid using it just because you have available credit.
The habits you develop with the card will help you avoid falling into the debt trap. You can learn your options for dealing with credit card debt by looking up debt solutions if you are currently facing this problem.
Keep Your Credit Utilization Rate Under 30%
Finally, it’s essential to understand what a credit utilization rate is with a credit card. This rate refers to the percentage of credit you use compared to your credit line.
For example, if you have a credit line of $1,000, you should aim not to charge more than $300.
Keeping your credit utilization rate under 30% protects your credit. If it gets higher than this, it can cause your credit score to decrease.
Learning How to Use Credit Cards Wisely Helps You Protect Your Credit
Learning how to use credit cards wisely helps you protect your credit and keep more control over your finances. In fact, using a credit card the right way will help you build your credit.
You can learn more about this subject or about ways to get out of credit card debt by checking out the rest of our site.