It’s National Credit Card Reduction Day! Did you cringe a little when you read that? Maybe, perhaps, because you know you need to clean up your credit card usage habits? Credit cards are one of the sharpest double-edged swords out there. When used properly, they can do you a lot of good. In fact, you really can’t build credit without using credit cards and if you don’t have any credit history, it will be nearly impossible to get a loan for a car, home, or other major purchase. Even if you feel ready to buy a house, if your credit card usage has been poor or absent, you may not get that mortgage loan. So, if you’ve been avoiding getting a credit card entirely thinking you were helping your credit, you’re painfully wrong. That being said, if you use a credit card poorly, it could mean your financial ruin. Credit card companies essentially “win” when you lose. The moment you fall behind on payments, those interest rates skyrocket and you wind up owing the credit card company much more than the original amount. Credit card usage is a game we all must play, but you have to know how to do it right. For National Credit Card Reduction day, here are tips for using your credit card responsibly.
Never spend money you don’t have
Always be aware of how much money you have in your checking account and make sure that, by the end of the month when that credit card bill is due, you can pay it off without receiving negative balance fees from your bank. A credit card is not free money—far from it. It eventually dips into your actual checking account, so always use it with that in mind.