Credit Card Tips from JN

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Credit Card Tips from JN

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Credit cards provide an efficient method to purchase gifts, meals and to make online purchases.   Using your credit card responsibly can help you build and maintain good credit.  However, it is important that you pay your bills on time each month.

Here are six tips to bear in mind when using your credit card:

  1. Spend only what you can afford and pay your bill in full every month.  Doing so may seem challenging, but this is the number one rule of using credit cards instead of letting them use you; it is truly the only way to avoid getting into credit card debt, and the only way to avoid paying interest on your purchases.
  2. In addition to paying your bill in full, you should also ensure that you pay your bill on time.  A missed payment incurs a penalty fee and interest charges.
  3. Use your credit card as a complement to your budget. This strategy usually involves creating a written budget, then using your credit card for purchases until you work through your predetermined spending limits. To make sure your credit card spending doesn’t get out of hand, never charge more to your card than you can afford to pay off each month.
  4. Know your limits. If you’re worried that you might overspend, ask your credit card company to lower your credit limit to something you know you can manage on a monthly basis.  Another strategy you can try: Use your card until you’ve spent a self-imposed limit, say $5,000, and then put your card away in a drawer until the beginning of the next month – or until you pay your bill in full. This can help you stay on budget and on top of your bill while allowing you to maintain a larger credit limit that might be useful in an emergency.
  5. Only use your card for the big stuff. A lot of people who get into credit card debt complain that it sneaks up on them, and for good reason. Sometimes it’s those little $1000 and $2000 purchases that, over time, can take on a life of their own when left unchecked.  Consider using your card just for big purchases.   The best way to do this is to save up for your purchase in cash first. Another option: Use your card for big, important purchases, and then pay it off over the course of a few months under a strict timeline — knowing that you’ll pay a bit in interest for the luxury of spreading out the payments.
  6. Use the card for needs not wants. A credit card should be used with discretion, since frivolous purchases can lead to debt. Credit cards can be used in emergency situations, such as a mobile phone bill that is due before your next payday. Use the credit card as a temporary loan to yourself, and then pay back the amount as soon as possible to avoid accumulating interest charges.
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