Credit cards are a financial rite of passage, but owning one comes with a lot of responsibility. If you’re a first time card holder, here are some simple steps you can take to stay out of debt and build a strong credit score.
Though they serve a good purpose, credit cards can tempt you spend frivolously on clothes, entertainment, and going out. And while there’s nothing wrong with the occasional “fun charge”, you need to set boundaries so you don’t get out of control with your spending.
Set a personal spending limit (one that’s below your actual credit limit) and stick to it. Resist the urge to splurge. And if you have to, keep your card at home so you’re not constantly tempted to swipe it. You never know when you might need your card for an emergency.
Pay Your Balance Each Month
If you regularly use your card for small purchases, or if your card is a part of your monthly budget, then you should be able to handle this pretty easily.
Carrying a balance accrues interest, which is an avoidable expense. Keep track of how much you spend each month and pay down your balance before the next billing cycle.
Pay On Time
Late fees hurt your credit score. Not to mention, they add up, causing you to owe even more money. Set reminders each month and pay your bills on time. And in order to make sure you have enough each month to pay your bill, don’t over spend, and plan to make your payments every pay period.
Stay Up to Date on Changes, Offers, Etc.
Your creditor will send you mail every month. Don’t ignore it! Review everything you’re sent so you stay aware of any changes that could affect your account or score. Also, some cards come with cash back rewards for certain purchases, which you can use to your advantage.
Also, if you ever see anything out of place, contact your creditor immediately. Never ignore suspicious items and always stay informed.
A credit card is a useful, and often times necessary, financial tool, use it prudently and you will realize many tangible benefits!