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These days, credit cards are so important to the financial stability of the average consumer. It actually frustrates me that there aren’t more options out there for people to learn how to properly use credit cards. If you have read my articles, you may have heard me say that proper use of credit cards can have positive repercussions on your credit report however, using them improperly will be the cause of future financial hardship. With that said, here are a few tips that you should keep in mind next time you go to swipe or pay your credit card!

1. First and foremost, never ever, ever, ever spend more than you can afford to pay back. The number 1 reason for bankruptcy in the United States is overspending on credit cards. A best practice is to look at your budget and calculate the maximum amount of money that you would be able to afford to pay back within 3 months. Once you get this number, you should forget your high credit limit and simply use that number as your limit. By doing so, you are ensuring yourself that you will be able to pay back any and all credit card debt within 3 months should a financial hardship happen. Also, being that your spending is tracked by your credit card issuer, it is good to show a bit of control over your spending
2. Even if you can afford to pay it back, you should never spend more than 50% of your credit limit. This is a sign of financial hardship. Generally in the early stages of financial hardship, consumers who have credit cards will start to spend more and more. Within a short period of time, they generally will max out their credit cards and be in more of a financial hardship. By keeping your credit card debt below 50% of your credit limit, you are displaying financial strength to the lenders and credit reporting agencies. This display of financial strength will lead to higher credit scores, lower interest rates and an overall better borrowing situation for you as the consumer!
3. Do not, and I repeat, do not make on time payments! I know, you are sitting reading this article saying “what, what, what, why not make payments on time?”. Well, the answer is simple, because you should make them early! Waiting for the last moment to pay your bills is yet another sign of financial hardship. In doing so, you may cause a stop to any growth in your credit score. Also, in waiting until the last minute to pay your bills, you open yourself to opportunities of late payment which we all know can be very bad for your credit score. To be honest, your best bet is to try and make your payments at least 2 months in advance! This will signify that you are financially stable enough to handle debt!

The rest is pretty simple. As long as you follow these general rules of thumb, it is hard to do anything wrong when you use your credit card!