It is not true that people who use a credit card have a problem with debt. However, if you are among those who actively use a credit card there is a good way and a bad way to use them. Here are four tips to turn them into an asset.
First, use only one credit card. In our home we have had only one card for the past twenty years. We have never had the need to use multiple cards. You run a higher risk of overspending when you use a variety of cards.
Second, be sure that the one card you use has a good rewards program. You can search online to find and compare cards. Try creditcard.com to compare rewards programs.
Third, make a policy for when and how you will use the credit card. The majority of purchases Americans make with a credit card are for food, clothing, gasoline and travel. By having a policy for how you will use your card it is easier to establish a budget for the items you frequently purchase. By reviewing your statement each month, you can monitor and control where you are spending money and estimate your balance each month.
Finally, pay off the balance on time and in full each month. A credit card should be viewed as a 30-day interest free loan…but if you fail to pay it off in 30 days it becomes a high cost loan that is damaging to your financial well being. By paying it off and avoiding all interest charges, you are gaining the rewards as a free benefit.
