Credit cards are apowerful tool that can help you build credit and help protect you from fraudwhen you use them for online purchases. While credit cards are an asset if youcan use them, they can become a liability and even dangerous if you’re not careful.If you are thinking about opening a credit card, here is how to manage yourcredit cards responsibly, so you don’t make these same money mistakes.
I want to start off by saying that there is freedom to debt-free living. We have always lived with the mentality that you only buy what you can afford. That said, we do often use credit cards for purchases because of the security they provide.
Living debt-free while using credit cards means that you are paying off the balance in full every month. When you live debt-free it means you get to keep more of your income. You aren't paying any extra of your hard-earned money towards interest. You also are able to live without the burden of financial stress. I will always give you the advice to live debt-free as much as possible. Always.
Want to know how we paid off our home loan early and are completely and totally debt-free? Check out this post!
Pay off your balances 100% of the time
If you use a creditcard, you must pay it off before your payment period. Doing this will helpensure that you don’t carry a balance each month. Having a balance can causeyour credit score to go down, and you will end up paying more money to pay thatoff in the future because of interest.
We were the victims of identity fraud. Here are three things you need to know about identity theft and how to prevent it from happening to you.
Check over your statements and bills
Check over your creditcard statements and pending charges to ensure that these were all things youpurchased. Compare these to your receipts to make sure that the charges arecorrect and that you catch any fraudulent purchases before things get too outof hand.
Don't miss this! 8 Money-Saving Reasons Why you Should Keep your Receipts
Pay more than the minimum amount
If you are paying offyour balance each month, this won’t be an issue. However, there may come a timein your life when you will need to carry a balance. If this happens, it’sessential to pay more than the minimum amount. Just because you have a minimumbalance doesn’t mean that it’s all you should pay. Paying more will help youpay off that debt quicker!
Want to know how to live a debt-free life without a budget? Check this out!
Don’t max out your credit card
Just because you have alarge credit allowance doesn’t mean you should go and spend that every month.Know what your credit card limit is and do your best to stay well below thatcredit limit. This will not only help your credit score but keep you fromracking up debt or getting your card declined because you’re out of spending.
This is the secret money-saving formula no one wants you to know!
Use a rewards credit card
If you are using creditcards, look for one that has a good reward on it. This could be everything fromtravel miles to cashback. When you use your credit card for regular spendingand then immediately pay it off, you earn cash back and other rewards for usingthe money you were already going to spend anyway!
Regularly ask to raise your credit limit and to lower yourinterest
If you have beendiligent about paying off your card and keeping yourself in good standing, callup your credit card company! Sometimes, they will raise your credit limit orlower the interest to reward your good spending behaviors. Raising your creditlimit can help your credit score, and reducing your interest payment can helpsave your butt if you ever have to carry a balance.
The real cost of impulse buying: 7 ways to stop overspending on impulse buys
Credit cards are a toolthat can help you on your financial journey, but you must treat them as such.They are not made to pay for things you can’t afford, but rather a tool thatcan help you be better with your money.
