The Five Habits of Responsible Credit Card Users
Posted on November 06,2012 by Michael Martin Leaño
Credit cards are like a double-edged sword. They have significant drawbacks, but have incredible benefits as well, especially for those who use their credit cards responsibly. But how is this done, exactly? Well, wonder no more. Below are the habits that responsible credit card users have that allow them to keep using their plastic without getting into debt.
Habit #1: Pay the balance in full and on time every month
This is the first habit that you need to develop. Paying your balance in full and on time every month means you’ll never get into debt and deal with interest. Putting in only the minimum, on the other hand, guarantees that you’ll be in debt for a long time and deal with excessive amounts of interest. If you don’t pay your card on or before its due date, you’ll only end up hurting your credit score and be penalised with a late fee, which means you’ll have to hand over more money than you should.
Habit #2: Check their credit score regularly
Another good habit you should establish is checking your credit score frequently. Doing this lets you monitor your credit history, look out for any inaccuracies and be alert for any indications of identity theft. You can get your file through Veda Advantage or Dun & Bradstreet. Both bureaus provide free reports, but make sure you choose the option that takes 10 working days. You can also use their express service, but you’ll have to cough up $49.95 at Veda and $30 at D&B each time. If you’re going to use express on a regular basis, it will be costly.
Habit #3: Track their credit card expenses
It’s generally a smart idea to check your statement every month. When it comes to credit cards, you don’t ever want to get surprises in fees, interest rates or even due dates because these could cost you extra, especially if you pay your balance in full every month (see habit #1). Besides, looking at your statement allows you to nip any credit card fraud in the bud.
Take note that tracking your card’s expenses isn’t just about looking at your statement regularly. You should also habitually file all your receipts so that you can easily reconcile all items listed in your statement without having to rely on memory. Remember that even the eidetic can forget.
Habit #4: Read the fine print in applications
Yes, surprises like rate increases, overdraft fees or any other unexpected penalties in your credit card statement are downright annoying, but did you know that you were already warned in advance about them? They’re in the fine print. Because of this, you need to establish the habit of reading these minute particulars whenever you apply for a new credit card. If you don’t understand the terminology used, ask the credit card provider about it, and make sure that you fully understand everything when you sign.
Habit #5: Buy only what they can afford in cash
You should only use your credit card to purchase things that you can afford in cash to avoid paying more than you should. If you don’t have enough money in the bank for a purchase, just wait until you have enough funds. Then what’s the point of keeping a credit card then you can just use cash? Well, using a credit card means you won’t have to carry so much cash around. It’s also more convenient, provide protection from fraud, and give rewards for every use.