Written by Charlotte Wood (last updated April 27, 2011)
Credit cards are an accepted part of today's world and something that many, if not all, people will participate in. It's easy: you can buy now and pay later, a concept obviously appealing to a consumer, materialistic society. Despite its ease however, you need to watch out for your money and make sure that you're using your credit as wisely as possible. Credit has the inevitable habit of getting its users into trouble and can end up making them pay way more for something for simple, stupid mistakes.
The first rule is definite and simple: never spend more than you can afford. If you don't have the money for something then don't buy it. Whenever possible, avoid using the credit card for simple, everyday items. When you use your credit card for even the most simple of necessities, you run the risk of building up way more debt than you can afford to pay and that's a problem. Use your credit card for only major purchases or purchases that require a credit card. You should never max out your credit card and should only use about thirty to fifty percent of your credit limit per month.
Another obvious way of using credit wisely, but one that many overlook or don't deem important is to 1) make your payments on time and 2) pay the full balance whenever financially possible. If you let your balance build up you create a situation for yourself where you actually can't pay off the debt and you end up paying vast amounts of interest. Again, use your credit card when you're sure you'll be able to pay it back on the next monthly bill.
You should choose a good credit card. Avoid annual fees and exorbitant interest rates. If you can choose a good credit card, that will do worlds of good for your wise credit usage. (See the article Choosing a Credit Card.) Credit cards can undoubtedly be helpful and useful in your financial life; they can alleviate financial stress in tight stretches of the month and help you build good credit, but it's a narrow road that should be navigated carefully. If you can use your credit wisely, then you can insure a healthy credit situation and not have to fear problems caused by credit debt, but you need to have discipline and make sure that you really know how to best use your credit card.
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