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The Best Ways to Use Your Credit Card

best ways to use you credit card

The best way to use a credit card to build credit is to use it responsibly. When used carefully, a credit card has many benefits and it a useful to help build your credit. Consider the following approaches to avoid financially adverse consequences of mishandling credit card usage.

Begin by Using Credit Card for Everyday Purchases

If you are new to using credit cards or are making a fresh beginning after having suffered the ill effects of credit card misuse, perhaps it may be best for you to start slowly.

Do not try to max out the limits on your credit card right away. In fact, avoid maxing out your credit card under all circumstances. Who cares what type of deals this clothing store is offering customers right now?

Instead, the best way to use a credit card is to make small charges on the card and pay the full balance every month.

The objective of having a credit card is not to indulge in purchases that you cannot afford to pay for in cash, but to use it as a convenient and safe means of payment.

If you begin by using your credit card to make low-cost everyday purchases, it will be easier to pay the monthly balance in full. This will help you stay below your credit limits, encourage you to practice good credit habits, and mark the beginning of your strong credit history.  

Make Larger Transactions When Ready

Once you have developed a positive habit of never exceeding your card limits and never missing payments, you may be now ready for making somewhat bigger purchases using your credit card.

Even when you are fully prepared, the best way to use a credit card to build credit is to keep your purchases well within your credit limit and leave an adequate margin for any unforeseen situation.

Whenever you make a significantly large purchase on your credit card, you should set aside the money for it so that you don’t end up spending it before the credit card bill arrives. Again, who cares what price that car dealership has that car listed for?

This way, when it is time to pay the bill, your payment would be ready. You may even pay soon after you have made the purchase, without even waiting for the bill.

When you continue to use your credit card with this level of responsibility, chances are that your credit card company will increase your credit limits. On the other hand, if you handle your credit limits irresponsibly, the limits could be cut back just as easily.

Self-Discipline is the Key

Using a credit card for everyday purchases is not the only best use of a credit card. The right way is to exercise financial self-discipline, regardless of what type of payment you have to make using your credit card.

In each case, you should be in a position to comfortably pay your credit card bill on time every month.

If you have a weak track record with credit management, consider making a fresh start with only one credit card.

This will help you monitor your payments and balances in a better way. Multiple credit balances and due dates could be difficult to manage and may damage your credit score somewhere down the line or lead you into a debt trap.

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