4 Smart Ways to Use Credit Cards

credit cardsIn our world today, credit cards are often seen as a necessity. But the truth is that credit cards can get you into trouble if you don’t use them correctly.

If you use them properly, credit cards can help you build your credit score and can come in handy when you’re in a bind and need to make a purchase that exceeds your bank funds. However, you can also use them unwisely by purchasing more than you can pay off, ultimately accruing massive amounts of debt. Still, credit cards don’t have to be a financial pitfall as long as you know just how to use them. Here are four smart ways to use credit cards:

Pay Wisely

Ideally, you should pay your full balance each month, however, if that’s not possible, pay as close to it as you can.

When you pay only the minimum, it’ll not only take you longer to pay off your debt, but you’ll also rack up more debt through the interest on your balance. Furthermore, make sure you prioritize your payments, as not all cards are created equal. Take a good look at your payments and decide which is most urgent. Make sure you pay off the card with the highest interest rate first and go from there to save the most money.

Choose the Right Card for You

There are tons of options when it comes to credit cards, however, you should look at a few before deciding on the one for you. Pick a card that matches your payment and spending habits. If you need to buy some high-priced items, pick a card with lower interest rates. When it comes to rewards cards, make sure any fees and interest are far outweighed by the perks and rewards you’ll receive. Overall, just make sure you do your research and read the fine print before picking your card and company.

Limit Your Cards

Although it may seem beneficial to get money off your clothing purchase, try to refrain from opening too many credit-card accounts. Simply put, the more accounts you have, the more likely you are to acquire debt. Try to stick to two cards at the most. Furthermore, if you start opening too many accounts you’ll actually start to lower your credit score.

Spend Wisely

While a credit card may scream “free money,” to some, that is definitely not the case. It may sound obvious, but remember, whatever you spend you’ll have to pay back eventually.

Try to use credit cards for smaller purchases that are easier and quicker to pay off. Of course, if you do need to use your card for larger purchases, make sure the card you use won’t charge you crazy-high interest rates.

Credit cards can be beneficial in many ways. From building your credit score to helping you in a bind to even paying for your plane tickets if you’re building rewards, they do have their perks. However, put in the wrong hands they can also be exceptionally harmful financially. Nonetheless, if you adhere to smart practices and spending habits, a credit card can be a great financial tool.

What are some of your smart credit card habits? What do you purchase with your card?

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