The responsible use of a credit card!

Credit cards are potentially a great way to manage fluctuating income or spending.  They can also be a cause of distress when they are not used responsibly.  This does not need to be the case and a few relatively simple steps should be able to keep your finances steady.The first thing that is required is having a good attitude.  This may sound vague but it is vital to respect credit and the fact that because credit can be a powerful tool it can also, when used badly, cause considerable damage.

A big part of the attitude is self-awareness and having the ability to know your limits.  One example of this is with interest free balance transfers that require a large amount of discipline both not to spend on the card and to renew the card in time.  If these steps are not followed then the card can become very expensive rather than a cheap source of credit.  If a person knows that they do not have this discipline then they can look for easier ways to take advantage of credit cards.

Spending wisely is a very important part of the wise use of credit.  It is true that a credit card means that more can be bought than relying on a salary alone.  This however, does not mean that everything should be bought. Credit cards should be used as a way of smoothing spending rather than increasing spending.

It is important to always pay back more than the minimum repayments.  Although minimum repayments are usually below the interest that is charged in the month, and is designed so that the card holder will eventually pay the balance off – this is very much in the future.  A card holder should aim to pay off as much as possible and definitely more than the minimum balance.  If there is trouble paying off more than the minimum balance then this is a warning sign that there is some potential trouble with the card.

It is important as well as paying more than the minimum to have a long term plan to pay off the balance.  Most people aim to retire at some point, which means that debts need to be paid down.  As credit cards are relatively high interest debts then these need to be paid off relatively quickly.
Responsible card users should also pay attention to the card terms and conditions.  They must be prepared to switch cards if the terms become unfavorable.