How To Use Credit Cards Responsibly

Credit cards are like a coin having both advantages and disadvantages. If you use a credit card responsibly then and only you can surely gain the benefits and if you use a credit card carelessly you will have to face the consequences as well. Applying for a credit card is a big step and first-time users can definitely make mistakes that can lead to the debt trap. Here are the 7 tips that you can consider on using a credit card responsibly.

1. Choose the credit card carefully: In order to use a credit card responsibly the first start with choosing the credit card with due care. You need to make a list of your spendings habits, requirements, etc. in order to compare credit cards online and select the one that suits them best.  

2. Read your card MITC: Before applying for a credit card you need to know exactly how costly it would be to get a credit card. You can only find out the actual cost of a credit card from the most important terms and conditions. All the hidden fees and charges are mentioned in this document. It will help you out in selecting a credit card that is pocket-friendly as well.

3. Timely credit card bill payment: Another tip to use a credit card responsibly is timely repaying the credit card outstanding balance. To avoid missing the due date you can register for the auto-debit services so that every month on a fixed date the credit card bill gets debited from your account without having to keep reminders of the due date. Skipping the due date can or not repaying the credit card bills can have a negative impact on your credit card bill. 

4. Keep a low Credit utilization ratio: You get a pre-approved credit limit and there is a rule to not use the credit limit of more than 30%. Keeping a low Credit utilization ratio helps in maintaining a good standing account and a good credit score. The high credit utilization ratio can affect your credit score negatively.

5. Don’t fall under the minimum payment trap: If you are under the impression that you will be exempted from paying the interest by paying the minimum amount of your due balance then you have mistaken it. This is one of the biggest credit card mistakes one can make. Carrying the outstanding balance from one billing cycle to another billing cycle will only increase the interest rates. You will be required to pay the high rates in the next billing cycle. So, it is advisable to pay the credit card bill in full. 

6. Regularly check your credit card statement and report: The chances of clerical mistakes are pretty high. You need to keep checking your credit card statement and report regularly. So that if you find any omissions and errors in your credit card report or statement you can immediately report it. The minute errors can badly impact your credit score. 

7. Report lost or stolen credit card immediately: Another way to use a credit card responsibly is immediately reporting the lost or stolen credit card. By doing this you are saving yourself from the misuse of your credit card and other fraudulent activities. It will save you from unnecessary charges and a very low chance of you falling into the possible debt trap. 

Bottom Line:

With a parting thought, you can definitely maximize the benefits of your credit card by using a credit card responsibly. The above-mentioned 7 tips will surely help you in building a good standing account and a good credit score. You need to be very cautious while using a credit card as the chances of falling out are pretty much high. The most important tips are keeping the credit utilization low and paying the credit card bills timely. The best option to pay the credit card bills is by opting for auto-debit services. 

Comment below your tips on how to use a credit card responsibly and what credit card mistakes one should avoid.