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3 rules to follow when using a credit card

Making purchases with a new credit card can be a great way to shop for some. The simplicity of using the card without concern for the balance in a checking account could be a relief, and the numbers are just numbers. This is one way many have found their credit card balances balloon out of control, and there are some good ways to keep that from happening. Choosing the right credit card, having a credit budget, and paying off the balance as quickly as possible are all good ways to keep using credit responsibly and wisely.

The Right Credit Card

Shopping can help you pass the time, find gifts for loved ones, and it can even be a hobby for some. This can also apply to finding the right credit card. Many of today’s issuers are willing to offer plenty of value to attract new clients and keep old ones. The right credit card is one where using it for purchases can add up to savings in other areas. A person who loves to travel might consider a card that offers miles. Hobbies and sports have become favorites of many, so choosing a card offering discounts in those areas might be best. Shopping for deals on groceries or gas could also be more fun if a particular card offers cashback for those purchases. Choosing a card that fits the lifestyle of the person using it can have many advantages.

A Credit Budget

It can be very easy to add up the balance on any credit card, so designing a credit budget might be a good idea. Using it for groceries to get cashback does not mean buying expensive gourmet foods, and taking unnecessary road trips might not be a good idea. A credit budget should be a reasonable amount that can be added to a normal budget. This will make it easier to pay off the full balance when it is due, and it can make those miles or cashback offers worthwhile. Straying from the budget too far could drive up the cost with interest and negate any benefits.

Paying Off the Balance

One of the easiest ways to get into debt is to only make minimum payments on a credit balance. This allows interest to add up, so paying off the balance monthly should be a goal. Knowing use a credit card responsibly means understanding interest can add up quickly over just a few weeks or months, so paying off that debt immediately should be part of a normal monthly budget. According to the experts at SoFi, “To avoid missing payments or making them late, consider signing up for an automatic payment plan with the credit card company.” Staying within a budget is part of wise credit use, but remembering to pay off the debt when it comes due is the part many might avoid considering.

Working to keep up with credit card interest is not a necessity if a person knows how to use a credit card responsibly. Paying off any balance monthly is the best option, but it may also require staying within a limited credit budget. For those with miles or other incentives, using them to save money on travel or other purchases is just one more way to use credit wisely.

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