Top 5 Responsible Credit Card Practices
Practice these five simple credit card rules and you are guaranteed to manage your account properly and increase your credit score.
1) Keep in mind, that your credit card is not a license to spend money. Many people take for granted that a credit card is like using actual money. People tend to spend differently with credit cards than with cash. You are more likely to spend less and keep track of your money if you have cash in your wallet. Your wallet can always be opened on a regular basis and you are able to physically count and feel how much money you have. On the other hand, with credit cards, people tend to forget how much they have spent. Keep track of your receipts and log online to view your bill on a regular basis. MOst importantly, do not spend on what you can afford to pay for in full.
2) Use your credit card for emergencies only. Do not get into the habit of using your credit cards for frivolous purchases. Spend what you can afford. Make yourself a monthly budget. Decide how much you can afford to spend with your credit card. If you can avoid it, do not use your credit cards at restaurants. Always pay your bills in cash when you go out to eat. Be careful when purchasing expensive items as well. You need to ask yourself if you are acting on needs or wants. If your purchase is based on a “want”, then you need to decide if you can really afford it. If you can, then go ahead and make your purchase. Do not buy what you can not afford. However, if your purchase is based on a particular need than your credit card can ease the gravity of your expenses.
3) Do not max out your credit cards. Often times, credit card issuers issue cards with large credit lines. It is very easy to over spend and max out your credit card. You will be fine if you can afford to pay the balance in full at the end of the month. However, if you can’t, you will quickly fall into a viscous interest paying cycle. Try to only spend between 10 to 20 percent of your credit cards limit. This will allow you to manage the debt easily and keep from getting in a debt trap. Your credit score will also go up if you are not always at the top your limit. Creditors will perceive irresponsible spending practices or financial difficulties. This can affect your interest rate or even cause you to be denied credit.
4) Leave your credit cards at home. There is a common saying that has a lot of truth to it. “Out of sight, out mind”. You will forget what you can not see. Keep your credit card at home and you will forget that you can use it. This is especially true, if you plan to have a night out on the town. It is very easy to go out, have a few drinks, and rack up a big bill. If you are armed with your credit card, chances are you will end up spending more than you had anticipated. If you leave your credit card at home and use cash, you will limit your chances of spending money you might regret later.
5) Do not ever give out the CVV code, or 3 digit code on the back of your credit card. Online retailers and payment gateways will always ask you for the code on the back of your card. If anyone finds out the information listed on both sides of the card, they will be able to use it almost anywhere online or over the phone. Identity theft is on the rise and these thieves are very creative. Be sure to always shred receipts with account numbers as well.
There are countless more ways to be a responsible credit card holder. Always keep in mind what you have just read and you will avoid debt and bad credit. However, most importantly, always use your common sense when using your credit cards.
Practice these five simple credit card rules and you are guaranteed to manage your account properly and increase your credit score.
1) Keep in mind, that your credit card is not a license to spend money. Many people take for granted that a credit card is like using actual money. People tend to spend differently with credit cards than with cash. You are more likely to spend less and keep track of your money if you have cash in your wallet. Your wallet can always be opened on a regular basis and you are able to physically count and feel how much money you have. On the other hand, with credit cards, people tend to forget how much they have spent. Keep track of your receipts and log online to view your bill on a regular basis. MOst importantly, do not spend on what you can afford to pay for in full.
2) Use your credit card for emergencies only. Do not get into the habit of using your credit cards for frivolous purchases. Spend what you can afford. Make yourself a monthly budget. Decide how much you can afford to spend with your credit card. If you can avoid it, do not use your credit cards at restaurants. Always pay your bills in cash when you go out to eat. Be careful when purchasing expensive items as well. You need to ask yourself if you are acting on needs or wants. If your purchase is based on a “want”, then you need to decide if you can really afford it. If you can, then go ahead and make your purchase. Do not buy what you can not afford. However, if your purchase is based on a particular need than your credit card can ease the gravity of your expenses.
3) Do not max out your credit cards. Often times, credit card issuers issue cards with large credit lines. It is very easy to over spend and max out your credit card. You will be fine if you can afford to pay the balance in full at the end of the month. However, if you can’t, you will quickly fall into a viscous interest paying cycle. Try to only spend between 10 to 20 percent of your credit cards limit. This will allow you to manage the debt easily and keep from getting in a debt trap. Your credit score will also go up if you are not always at the top your limit. Creditors will perceive irresponsible spending practices or financial difficulties. This can affect your interest rate or even cause you to be denied credit.
4) Leave your credit cards at home. There is a common saying that has a lot of truth to it. “Out of sight, out mind”. You will forget what you can not see. Keep your credit card at home and you will forget that you can use it. This is especially true, if you plan to have a night out on the town. It is very easy to go out, have a few drinks, and rack up a big bill. If you are armed with your credit card, chances are you will end up spending more than you had anticipated. If you leave your credit card at home and use cash, you will limit your chances of spending money you might regret later.
5) Do not ever give out the CVV code, or 3 digit code on the back of your credit card. Online retailers and payment gateways will always ask you for the code on the back of your card. If anyone finds out the information listed on both sides of the card, they will be able to use it almost anywhere online or over the phone. Identity theft is on the rise and these thieves are very creative. Be sure to always shred receipts with account numbers as well.
There are countless more ways to be a responsible credit card holder. Always keep in mind what you have just read and you will avoid debt and bad credit. However, most importantly, always use your common sense when using your credit cards.
Labels: Business Credit Card, business credit cards, credit card, credit cards, low interest credit card, low interest credit cards
Credit Card / Financial news blog post by Todd Holliday at 8:20 PM 