July 20, 2017

While many people would love to avoid using credit entirely, credit is actually something that is a necessity for those wishing to make large purchases such as home or vehicles in the future. It’s best to start you credit building early so that you can have a good credit score by the time you’ll need it. In order to ensure you don’t get into any trouble using credit, there are some a few things you should know about how to use your credit wisely.


Here are a few practical tips about using your credit wisely:

  1. Know the cost of your credit

Interest rates can make credit more expensive than you might think. If you pay off your balance quickly, you might not spend much. But, if you only pay the minimum balance each month than even a small purchase can cost you a lot. Pay attention to how high your interest rates are and when the interest begins to charge to your account. If you can pay of the balance before this time, your credit will not be costly at all.

  1. Don’t take on more than you can handle

What is your monthly income and how does it compare to your expenses? If you are making much more than you are spending, you may be able to take on more credit. Otherwise, do not overspend for your budget. Make sure that with the addition of monthly payments to the credit card that you will still be able to pay your monthly expenses with your income, with something left over for savings.

  1. Choose your credit cautiously

You might get a lot of offers for credit from a number of different sources. Inspect each very carefully and shop around to find the best interest and payment deals possible. Look for cards not only with low rates but also with good repayment options, such as allowing early repayment, and other benefits.

  1. Consider a secure card

Secure credit cards require a balance to be kept with the company before the card can be used. Many of them limit the amount of credit you can take by the amount of balance you hold in the company. This can help you to pay attention to how much you are spending and keep yourself from spending too much.

  1. Pay off your balance every six months at least

Leaving your balance to sit while just making small payments is a bad way to use credit. You should never have a balance which you cannot pay off within 6 months at least. Pay off your balance as soon as possible to avoid fees or complications caused by unexpected financial drains.

Credit can be a blessing when you need to make a large purchase or if you have a need to make a purchase before your paycheck comes in. Taking care to practice good credit habits is something that will impact your life for years to come. Take these tips to heart when you’re thinking about getting credit and how you should use it.

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