4 Tips to Use Credit Card Wisely

A credit card is something that you must have. It’s as important as a bank account. One benefit of credit card is to build up your credit history, so in the future you can use the credit card score to purchase a house or a car.  In other side some people do not know how to use the credit card wisely. They use credit cards to buy anything from clothes, electronic, or furniture, and all consumers stuff in the same time, and it’s ended up with a pile of debts. They start paying with a minimum pay every month and finally make a higher delinquency rate.

According to Equifax Canada, total outstanding credit-card debt hit $78 billion in September 2009, up $ 2 million from $76 billion in September 2008. Ninety-day credit card delinquencies jumped 53 per cent between September 2008 and September 2009, hitting $3.6 billion (source: Canada.creditcards.com).

To avoid using credit card unwisely, here are some tips that may be useful.

Do Not Own Too Many Credit Cards

Managing more than one credit card is not easy, if you do not limit the usage and make record of every purchase.

Purpose of Using Credit Card

It’s better if you use credit card only for emergency situation like paying a tow truck when your car broke down, or paying a doctor or hospital when you are travelling out of country.

Limit in Using Credit Card

Every month you must use the card or risk having your account closed, but you have to use it in moderate purchase, let say $ 50 for buying clothes or shoes, or grocery. You need to know how much you can afford to pay the debt and avoid overspending.

Pay Off Your Debt in Full and Pay On Time

Pay off the entire or most of the outstanding balance each month and pay it on time or before the due date. Late payments cause you penalty, raise your interest rate, and damage your credit report.