Take Credit! 5 Handy Tips for Using a Credit Card Wisely

Remember the day you got your first credit card? Nothing can trump the freedom it gives you. The ability to spend on whatever you want, whenever you want can be liberating. Using credit cards in the right way can see you racking up air miles to jet off on amazing adventures and boosting your credit score.

Using a credit card the wrong way, however, can lead to overspending and costly interest fees. The average American is $38,000 in debt and millennials are the most in debt of all the generations. Here’s how to use a credit card wisely.

1. Only Spend What’s In Your Bank Account

This may sound obvious but only spending what you have rather than banking on having the money at a future date is a really important rule to follow.

By doing this you ensure that you always have the money in your bank account to pay off your credit card on time and avoid interest fees.

Remember debt is not a death sentence but it’s best avoided if you can.

2. Get the App

Most credit cards now come with an app that allows you to pay off any debts you have as soon as they have gone through. You don’t have to pay off the full balance as many apps allow you to choose exactly the amount you’re going to pay off.

This means if you decide to use your credit card in a store for a large purchase – something that can boost your credit score and provide you with extra security that a debit card can’t – you can pay it off straight away.

You can instruct the credit card app to remember your debit card details so they are always on file and ready for you to pay off your credit card at any given moment.

3. Decide What To Use Your Credit Card For

Setting yourself clear boundaries about what to use your credit card for is important. If your primary goal is to boost your credit score then it makes sense to use your card for making all your purchases.

Using your credit card for smaller purchases – like McDonald’s or for public transport – might be problematic for some users. These smaller charges could soon add up and if you forget to pay them off straight away you could find yourself hit with a big bill at the end of the month.

Most debt occurs because of inaccurate thinking about money not simply because of greed or poor decisions.

If you think you need more education about how and what to use your card for learn at this site.

4. Pay Off Your Card In Full

The temptation is always to only pay the minimum amount but doing this only keeps your head about water and can soon land you with hundreds of pounds of interest payments on top of the rest of your debt.

Instead, make sure you pay off your card in full every month and you will reap the benefits.

5. Don’t Use Your Card For Cash

Credit cards are designed for in-store transactions. This is one way the credit card companies make their money, by charging the stores a commission to use their machines.

So it makes sense then that using a credit card to withdraw cash will incur a hefty premium. Use your bank’s debit card to take out money and only use credit cards to get cash in a real emergency.

Using a Credit Card Wisely Doesn’t Have To Be Tough

Using a credit card wisely is an important skill to have. But just like learning to ride a bike or learning a language it takes a lot of practice to know how to use a credit card properly.

Make sure you read the rest of our debt articles for advice on how to make credit cards and debt work for you.