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How to Be a Smart Credit Card User

There is no doubt that credit cards are very useful financial tools if they are used properly. But if you are not careful, they can end up causing you problems and affecting your overall financial health. So, you should be aware of how to use them responsibly and effectively. However, in today’s financial climate, many people are being issued with credit cards without being in a strong financial position. If you are concerned about your own credit card use, here is some advice about how you can be a smart credit card user.

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Start With a Single Card

If you have never used a credit card before, it makes sense to start off with just a single one before you get any more. This way, you are in a much better position to monitor it every month and you are less likely to miss any payments. Also, you may not have a credit history yet so starting off by having multiple cards could end up being detrimental in this regard as well.

Pay Off the Balance in Full

Every month, you want to be in a position in which you pay off the balance in full. Otherwise, you will end up paying unnecessary fees which will add up over time. Not only this, you could end up harming your credit score. Take a look at if this is something which has already happened to you. Resist the temptation to make impulse purchases on your credit card or you are much more likely to let your finances get out of control.

Use the Card for Needs

The danger of credit cards comes when you start using them to buy everything that you want at the time. Instead, you should refocus your mindset so you are using them for your needs rather than your wants. You may have a bill that you need to settle now that you can’t afford to pay off until your next payday. As long as your finances are in control, this is a responsible use of your credit card.

Keep Your Credit Utilisation Low

Just because you have a high credit limit doesn’t mean that you just keep your card close to the maximum all the time. Instead, try to focus on keeping it below 30% at all times. This is another factor which can impact your credit score, and it will also help to prevent you from racking up any charges which could spiral out of control.

Always Put Responsible Usage First

Many credit cards offer some sort of rewards scheme and while these may be very useful, you should never prioritise them ahead of being a responsible card user. The late fees that you will end up paying could cancel out any rewards anyway.

Credit cards are useful tools when used responsibly. Use these five points as a starting point and you will help to develop a credit card usage technique that stays firmly under control.