Using credit cards responsibly

A few months ago, I wrote an article on this blog about how to avoid financial problems where I offered a few tips on how to manage one’s finances. One of the advices that I gave was not to use credit cards. It was based on my personal observation that I only know a few people who are using their credit cards responsibly. The credit card is not the devil; it was designed for our convenience. But it is the misuse of this card which has put many lives in financial mess.

Unfortunately, unlike gadgets or tools, credit cards don’t come with user manuals. It would have been a lot better if your first credit card comes with a user guide offering suggestions on how you can use this card responsibly.

Most people fall into the trap of using their credit cards as a substitute for cash until they’ve reached their credit limits. They pay their everyday purchases in credit card not knowing that this will quickly lead them to debt. Some would use their credit cards to purchase luxury items that they cannot afford to pay in cash. This habit of living in borrowed lifestyle can quickly put someone in debt. If you cannot afford to pay something today, then there’s a big chance that you will have difficulty paying for it tomorrow.

I was told that it is best to pay as much as you can in your credit card balance each month and not to get the habit of making minimum payment only. This way, you not only saved yourself from paying more in interest but you will also pay your debt quicker and cheaper.

The bottom line is we should make wise decisions when spending our money or using our credit cards. When buying something, let’s ask ourselves if we really “need” to buy it or we simply “want” to have it. Let’s resist the temptation of buying something that we don’t really need especially if it is something that we cannot afford. Indeed, good credit card habits require self-discipline.