Falling into a credit card trap is easy. You see something you want, you swipe! Using your credit responsibly will keep the financial stress down and ensure your credit score stays good. There are 7 steps that you can take to ensure that you are doing all that you can to use credit cards responsibly:
- Financial App Backpack – using an app that can help you to stay on track with both your short and your long term financial goals is an excellent resource.
- Track Expenses – As we talked about before in a previous lesson is: It Costs to Not Pay Attention to what you are spending. Using credit cards can be great for everyday expenses but it can also prove to be a challenge when it comes to dividing your expenditures between wants and needs. If you track your spending you will have concrete evidence that maybe it is that $10 stop at the coffee shop every day that is throwing you off.
- Credit Monitoring – check your credit report for fraudulent activities regularly to protect your credit score and to ensure no one is using your credit cards that you have not authorized.
- Use it like a debit card – this is one of the best tips when it comes to using credit responsibly. Instead of using your card to the limit, only use it up to the point where you have the money to pay it. In other words if you only have $200 in the bank to pay for items, you should only charge $200 to the card so you can pay it off at the end of the month.
- Pay it off each month – don’t carry balances on your cards if you can help it. It is expensive and can quickly become overwhelming. See #4 above on how you can avoid not being able to afford to pay off the balance every month.
- Rewards Yourself – choose the credit card that best fits in with your lifestyle. If you travel look at the card with travel perks. If you shop at a certain store look for cash back cards for that store. You can use your card to earn.
- Policies and Fees – become very familiar with your cards policies and fees. Understanding the terms of agreement is very important because you may think you are doing everything right only to find out that you are not according to the credit card company.