7 Rules for Using Credit Cards Effectively

It’s easy to get into the habit of using a credit card during your shopping.

However, the successful use of credit cards requires appropriate planning so that you don’t end up with stacks of low-interest debt due to excessive spending.

As our world transforms into a society without money, try to discipline yourself with your finances and stay within a budget.

Know your cash flow, how much is coming in each month as well as how much is going out.

You’ll save yourself a lot of financial pain and heartache if you follow the rules. Break the rules and you could find yourself buried in debt.

Here are seven credit card rules to follow:

Always pay on time

Late payment of your credit card bill presents a myriad of financial issues. Not only will you be hit with late charges, but you will also eventually owe extra interest.

If you are behind after 30, 60, 90 days, it will damage your credit score.

Never pay just the minimum

Making minimum credit card payments on time during each billing cycle helps you avoid penalties and charges.

With the minimum payment you can keep your account in good standing. But if you only pay the minimum, you’ll be carrying a balance and be charged interest on that balance.

Don’t overspend

One way to ensure you can pay your balance in full and to never charge more than you can afford. In fact, you should always have enough cash in your accounts to cover your credit card bills.

When you use your credit card, you know that your credit card company gives you a few days of interest-free grace. If you pay off your balances during this period, you won’t be paying any interest charges, while also having the ability to rotate your cash for a few days.

Watch your interest rate

If you pay your credit balances in full each month the interest rate won’t matter. You will not owe any interest.

But, on the chance that you have to carry a balance on your cards, it’s important to know which card is going to do the least damage to your wallet.

Your credit card may have a variable interest rate, which means that it can fluctuate monthly based on a number of factors.

Staying in tune with the current rate for each of your cards will help you be prepared. Know which one is the lows APR as well as any promotional balance transfer options.

Spend a lot? Get rewarded

If you’re going to use credit cards anyway, you may as well get rewarded for it. Be smart about the cards you use so you can build points and cashback to spend on things like travel.

Read statements

Whether you’re paying your credit card bill or your cable bill, ensure your statement is correct. I can’t tell you how many errors I’ve found on the bills over the years.

We’ve literally saved thousands of dollars just by checking our statements. Moreover, you can also find monthly fees or subscriptions that you no longer need or that you did not know you had.

This has been one of the main ways I have saved money!

Keep old accounts open

If you’ve had this card for a few years, closing the card will shorten the average age of your lines of credit. This negatively impacts your credit rating.

Furthermore, lowering your available credit limit can negatively impact your credit score, too.

What I tend to do is often used it 1 time a year for a small purchase to keep it open and pay it off in full when the bill arrives.