Your Guide to a Responsible Credit Card Plan
Using credit cards is much like any other financial decision. You should go into it with a good, working knowledge of how the industry operates; how your credit card works, including the terms and conditions of the credit card; and what is expected of you as the customer.
If you take the time to educate yourself about all aspects of the credit card industry and your credit card, in particular, then you will be better prepared to become a fiscally responsible credit card customer. This will allow you the opportunity to enjoy the benefits of credit cards without the associated risks of irresponsible overspending.
Here is your quick guide to developing a responsible credit card plan:
- Credit cards are often a necessary part of building a credit history – You may be inclined to dump credit cards altogether; particularly if you’ve been privy to all of the negative press attention given to credit card companies. However, this may not be the best decision, as your credit card purchases can go a long way to building a strong credit history so you will be able to make larger purchases, such as vehicles and homes, without a problem. The best rule of thumb when building a credit history is to charge at least a few things every month and then pay them off in full when the credit card bill arrives.
- Never begin spending until you are fully aware of the card’s terms and conditions – What you don’t know can hurt you! Make it a point to always read and reread a card’s terms and conditions before accepting it; otherwise, you could find yourself paying exorbitant interest rates and fees and potentially damaging your credit. Carefully read the card’s fine print, and if there’s something you don’t understand, call the credit card company to explain it to you.
- Don’t break the 30 percent rule – One of the best rules of thumb when dealing with credit cards is to never charge more than 30 percent of the card’s credit limit; otherwise, creditors may view your spending as irresponsible and your credit score can suffer as a result. Plus, keeping your balance to a minimum prevents you from overspending and being caught in a situation where you can’t pay your bill.
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