How To Use a Credit Card Responsibly and Avoid Debt

There’s no better way to prove you can handle credit than to have credit and use it responsibly. If you’re building your credit and you want a credit card for certain purchases, there are several ways you can use it to your best advantage instead of ending up drowning in debt. When you know how to use them effectively, they can be highly useful tools.

Here’s how to use a credit card responsibly and avoid debt.

Pay Off Your Balance Every Month

You can use your credit card every month if you like, but be sure to pay it off completely each month. If you carry a balance, it will be harder to pay it off later with the addition of interest to your debt. Credit card debt can snowball quickly, so never charge anything that you can’t pay off that month.

Use the Card for Needs, Not Wants

Do you need that item you’re thinking about buying? If not, avoid using your credit card for it. These cards should be used when you need something and not when you’re making an impulse purchase. Once you start to think of it as a way to buy whatever you want, you’ll soon have a lot of debt on your card.

Never Skip a Payment

When you don’t make every payment on your credit card, the balance quickly grows. If you skip a payment one month, that means you’ll owe more the next month, and you may not be able to make that payment. Skipping one payment can be a slippery slope that leads to a large amount of debt that just keeps getting bigger.

Use the Credit Card as a Budgeting Tool

When you use a credit card to pay for items, it’s easy to see exactly how much you’ve spent. When you’re trying to spend a specific amount each month, checking your credit card is a helpful way to see where you are about your budgeting goals. You may save one category of your spending for your credit card and then pay off that amount every month to avoid debt.

Use a Rewards Card

When you use a rewards card, you can build up several reward types. Many cards pay you in miles that you can then use for money off when you travel. Others pay in cash back that you can use for anything you like. As long as you pay off your card every month, you’ll be getting those rewards at no cost to you. This is a great opportunity to make your spending work for you.

Report a Lost or Stolen Card Immediately

If you don’t know where your credit card is, it may be in someone else’s hands. Always keep it where it’s safe. If it isn’t in that spot, you’ll need to report the card as being lost or stolen. This will shut down the card, and you will be sent a new one in the mail. That way, no one else can start charging things with your card.

Check Your Monthly Statements Carefully for Accuracy

It’s important to know how much you spend, and it’s also important to know whether there are any mistakes with your card. If a vendor charges you twice, for example, you need to know that right away so that the other party can be notified to fix the problem.

There are a lot of scams out there that involve credit cards, and you need to make sure that you aren’t the victim of them. Check your statements every month to make sure that everything on your account is correct.

Be Aware of Any Fees You May Be Charged

Do you know what your credit card will cost you? Many credit cards come with a yearly fee. If you don’t have an annual fee, there are likely other fees that you could be subject to. One of these is a fee for being over the limit.

If you charge more than the credit amount given to you by the card, they will likely add a fee to what you owe. The same is true if you make a late payment. A late payment fee is extremely common. If you want to do something with your card, such as transfer a balance to it or use it for a cash advance, there will be other fees you’ll owe.

Monitor Your Credit

You should always know what’s on your credit report in case there are any mistakes. Mistakes in credit reports are very common, and they can hurt your rating. There are several free apps and websites that can help you check your credit score for free. Get into the habit of doing this regularly to stay on top of your credit report.

Using a credit card responsibly can be a great tool for raising your credit score. As long as you’re careful about using it and checking on it, you can get a lot from your card and build toward a better financial future.

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Hi! I am a millennial mom with a passion for personal finance. I have always been “into” personal finance but got inspired to start my blog after a period of extended unemployment. That experience really changed the way I viewed my relationship with money and the importance of accessible personal finance education.