People who practice sound financial management enjoy the good things in life, even credit. They use this facility to their advantage. Truly, applying good credit practices can help credit card owners reap the benefits of using credit cards, and doing so keeps them away from the financial black hole where most irresponsible card holders end up.
Proper and Responsible Use of Credit
Proper and responsible use of credit helps people build a strong credit history, which can serve them well for many years to come. People with good credit history easily qualify for a variety of loans, at very reasonable interest rates. These loans include a mortgage for their dream home, an auto loan, and personal lines of credit for remodeling, renovation, or emergencies, and credit cards for everyday use.
Credit Card Tips
Below are some relatively easy steps, which, when followed religiously, may can help anybody achieve not only a good credit history, but ultimately, financial freedom.
If there is really a need, shop for the best interest rates and terms available when choosing a credit card or a loan. This will help save a lot of money in the long run.
Pay bills promptly, preferably 2 to 3 days before the due date, to avoid late fees and keep finance charges, if any, to a minimum;
Always pay more than the minimum amount due each month. Doing this will decrease the total amount paid, and the length of time that it takes to pay the whole amount off. Always pay down debt quickly to maintain good credit practices.
Carry only the card that is used regularly. This will help avoid running balances in all your credit cards if you have many;
If you know that sometimes you get out of hand, especially when shopping (if you’re a compulsive shopper), leave your credit cards at home. If you’re really bad, freeze them in a block of ice. While the ice melts, you have a chance to decide whether you really want to make that purchase.
Use a debit card instead of a credit card. It’s a lot different when you actually have to take out money from your account to pay for the things you want to buy that just swiping it using your credit card. The purchase may not be so tempting anymore specially is it involves a substantial amount of money.
One idea of good credit practices is to limit the number of credit cards you have to two (2) or three (3), which will hopefully prevent you from maxing out more than what you can actually afford and pay.
Always practice good records keeping. Keep a file for your charge receipts. This allows you to check store statements and credit card statements. It also gives you documentation if you need to dispute anything with your creditor. Always remember that they make mistakes, and to have records with you will be you’re your own best interest.
This is very basic: memorize your personal identification number (PIN). Never write nor keep your PIN number in your wallet or written on the back of your credit card.
Tear up carbons after every use to prevent credit card fraud.
Keep a list of all credit cards, including account information and phone numbers, in a safe place. This will make reporting of a lost or stolen card quickly. You may also scan and copy both sides of every credit card and keep the copies for documentation purposes. These may come in handy later on.
Budget your income well. Set aside 10-15% of your gross income to pay for your loans and debts. Ideally, 30% of your gross income should go to your rent or mortgage. Following a budget will assure that you are managing your finances well. Any deviation on this signals an imbalance, meaning something is wrong. When this happens, look at the “whole” and “repair” it.
Once your debt is paid off, put the 10% you saved for payment to your debts and loans into a saving account. Continue setting aside this money for your savings. If you do this, time will come you will have saved enough money you can use for any project you might want in the future.
Last tip: Live within your means. This means if you can’t afford it, don’t buy it. If you really want something, save enough money and then buy it when you have saved enough!