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6 Smart Ways to Use Your Credit Card

Credit card can be a helpful friend or it can be a destructive friend. It can be a destructive friend if you don’t use it appropriately. It can cause serious financial and personal problems. But if used correctly, credit can enhance your way of living. Just imagine buying a big item like a $3,000 couch with cash.

Not too many of us can come up with that cash. If used wisely, credit cards can be a great way to build a good credit score–something that will come in handy for a home purchase or personal or business loan.

Here are six ways to use your credit: pay your credit card bills on time, check your credit card statement, pay more than the monthly minimum, keep track of your spending, set a reasonable credit limit, use your credit to make big purchase.

1. One smart way to use your credit card is to pay your credit card bills on time.

When you receive your credit statement, check it to see when it is due and make sure you pay it on time. Paying your credit card bill on time is important for three reasons. First, you build your credit score by doing it. Second, you have a good billing record when you are ready to take out a loan for a home or for your business.

One of the main factors lenders look at when deciding whether to approve you for a loan is how on time you pay your bill. Third, you avoid extra late payment fees.

To avoid late payment fees, set your payment up automatically so that when your credit card bill is due, it is taken from your checking account. After all credit card debt is high interest debt.

2. Check your credit card statement

Whenever you receive your credit card statement, always check to see how much is the balance, how much interest was charged, what is the minimum payment for any errors. If there is an error, then follow up with a phone call

3. Another smart way to use your card is to pay more than the monthly minimum payment

If you pay the monthly minimum payment every month, you will end up paying more in interest and it can take you quite some time, even years (depending on how much you spend) to pay the balance off. My rule of thumb is that if I buy something using my credit card, I just pay it off in full when it is due.

I just don’t like to pay interest. I use credit cards to build and maintain my credit score and to take advantage of reward points. But if you cannot pay your balance in full, see if you can pay more than the minimum.

For example, if you have a $5000 balance with a card that charges 21 percent interest, by making minimum monthly payment of 2 percent, you will pay off the loan in several years.

But you can reduce the time it would take you to pay it off if you make more than the minimum. Making higher repayments on your credit card balances will help you save a lot of money and help you pay your balance faster.

4. Keep track of your spending

Keeping track of your spending is another way to use your credit card responsibly and wisely. Credit card is very convenient and it is easier to pay things with your credit card than it is to pay with cash. So it is very easy to over spend.

If your credit cards are at or over limits, it is time to track your spending and cut back on necessities. See the following article, Incredible Ways to Reduce Your Expenses and Save Money for more information

5. Set a reasonable credit limit

The fifth way to use your credit card wisely is setting a reasonable credit limit. That really depends on how much credit you can afford, your family’s size, and current financial status.

If you have a $20,000 credit card limit, but cannot really afford it, you might be tempted to buy more. The result can be too much debt because there is not enough money to pay it off.

6.  Use your credit to make big purchase

If you can afford it, use credit card to make a big purchase like a TV set or furniture. But the goal is to always pay it in full at the end of the month or pay way more than the minimum payments when the bill is due.

If you buy a couch for $2000 with a credit card charging 18.5 percent interest and pay off the balance by making the minimum payments, it will take you more than 12 years to repay the debt.

By the time the balance is paid off, you will have spent an extra $1900 in interest alone–almost the cost of the couch. So using credit cards for a big item only if you can repay it as quickly as possible.


In conclusion, credit cards can help you. It can also give you a lot of headache. It all depends on how you use it.

See the following articles for more information:

How To Save on a Tight Budget

How Making Extra Repayments Can Help You Pay Down Your Debt Faster

5 Easy Tricks To Help You Live Debt–Free

8 Reasons You Will Never Get Out Of Debt

5 Unbelievable Tips to Help You Pay off High Interest Debt

Incredible Ways to Reduce Your Expenses and Save Money

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