How to use credit cards responsibly

making a payment with a debit card

I first had a credit card as a teenager, it seemed exciting and grown up to have this ‘extra money’. My limit wasn’t high, but I soon reached it, paid if off and repeated this often. When I was first married and became a parent, we ran up a little debt on a credit card. We were young, very poor and it was tough. I worked hard to clear the debt, and then we cancelled the card and didn’t use one again for a long time.

Eventually, I realised that a credit card could actually be of benefit if used in the right way. They can help you manage your money and build up your credit score, as well as being useful for unexpected bills that you would otherwise struggle to buy.

These days, I have a credit card that I do use frequently, but I always pay it off in full each month. I also have a second card that I used to purchase a large item, as the interest rate was lower than buying the item on finance. For this, I am paying it off over a few months, factoring in the interest.

Here are five tips to help you use your credit card responsibly.

1 Always Pay on Time

Late payments not only will incur fees, but they can have a negative impact on your credit score for up to SEVEN years. Set yourself reminders of the date you need to pay your credit card bill and consider setting up an automatic payment to ensure that at least the minimum payment gets made each month. If you are struggling with repayments on several cards, it is worth looking into consolidating your debt. Click here to find out how can help.

2 Practice Self Discipline

Be cautious about what you use your credit card for. Don’t purchase things just because you can. Consider if you would still make the purchase if you were paying cash – if not, then don’t buy it on your credit card either.

3 Check the interest rates

If you are making a large purchase, that you will pay back over a period of time, make sure that you have checked the interest rate on your card and are aware of how much you will actually payback. Look for the best credit cards that are available to you.

4 Don’t max out your card

If you are using more than 30% of your credit, you can actually harm your credit score.

5 Stick to a budget

Knowing how much you can afford to borrow is really important. Whatever you spend on your credit card, you need to be able to repay. Knowing what you can afford to spend each month will help you to keep your debt to an affordable level, and ensure that you are able to meet all your repayments.

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