Irresponsible spending on credit cards often leads to financial ruin. This is because consumers just spend and worry about the bills later. Credit card statements are one of the most ignored pieces of mail. Missing a payment affects your credit and results in more interest being tacked on to your balance, thus reducing your available credit.
Pay Off Balances
If you need to use your credit card, make small purchase like gas or groceries. Pay off these balances when you get the bill. Don’t let them linger by making only minimum payments. It is a good rule of thumb to refrain from making purchases that you cannot pay in full when the statement comes.
While keeping revolving credit active on your credit report it does show financial responsibility in regards to on-time payments. However, the recurring interest does not help you financially.
Pay More than Minimum Payments
If you cannot pay the balance in full when the statement does arrive, at least double the payment or make it considerably more than the minimum amount due. Paying only minimum is not paying down the principal or amount spent, it is merely cutting down the interest
Only have 2 Active Credit Cards
It is a good idea to only have 2 active credit cards. Having multiple credit cards is the leading cause of financial debt. While you may have the income and credit to qualify for multiple credit cards, maxing every card out puts you in financial distress. Two credit cards are ideal because you limit yourself to how much you can spend.
This practice also helps you better maintain your finances balancing out when the payments are due and still being able to make more than the minimum payment due.
Refrain from Frequent Retail Therapy Excursions
Credit cards should be for emergency purposes and large purchases only. Many consumers just spend and spend without thinking about the payments. Retail therapy is a big problem when you have plastic to purchase it with. A good rule of thumb here is, if you can’t pay for it with cash or it is not a necessity, leave it at the store.
Being responsible with credit accounts is important. Bad credit can stop you from buying a house, purchasing a safer vehicle and can even prevent you from being hired for employment.
Many companies require a credit check for new hires, which shows financial responsibility. It reflects on your personal character with a potential employer.