5 Rules for Using a Credit Card Wisely

This is a guest post from a good friend of ours. Thanks to Andy for providing us with some great content.


The average credit card consumer finds himself in debt a few years after getting a credit card. It’s not surprising. Most are college students. Young people used to get duped into signing up for all these credit card offers. But recent changes in law stipulate a lot more conditions for credit card companies when interacting with young people that are getting credit cards for the first time.

Nonetheless, past notwithstanding, these rules can help you use a credit card wisely in the future. You won’t fall into the trap of so many young people before you that picked up offers they thought were too good to refuse. Several years later their credit reports spoke for themselves, and they wished they had read up on the five rules for using a credit card wisely.

  1. Learn the rules first – The first set of rules comes from just using your card the right away. Getting steeped in the rudimentary basics of using a credit card is a good first step to using one. If you’re unaware of the basics, then you’ll undoubtedly use it the wrong way. First of all, pay off your credit card in full each month no matter what the circumstances are. You will avoid interest payments, late charges, higher interest rates, and fees by just paying it off in full each month. Second of all, get bills deducted automatically from your card. This will give you the freedom not to worry. You won’t need to remember what date your bills are due and when they need to be paid. You might even get payment discounts from some companies. The only date you’ll have to remember is the date that your credit card bill is due. Don’t see your credit card as a debt either, but view it as a liability that has to be paid. Many people look at the balance on their credit card, and they read it as debt. Consider your debt a short-term loan. It’s like a loan you don’t have to pay interest on. Your money will just stay in your account longer. It’s just that simple. Don’t view your card as an emergency reserve either. Many people think their credit cards are their best ways out, and that it’s just a sort of problem fund, but that is just ridiculous. A lot of people mistakenly think fun activities are an emergency too, but that’s just not the case, and when the reality strikes in the morning they’ll get the point clearly.
  2. Any credit card has a limit – When you open a line of credit, you will be issued a credit limit, and it varies from between twice your monthly income or even up to three or four times your monthly income. Don’t ever spend more than you can pay back, however. At the end of every month, you will need to pay back the borrowed money, and there will no alterations to this rule. The second rule, therefore, it to spend within your limits.
  3. Keep a record of all your expenditures – Bank statements, receipts, and carbon copies are all important, and they need to be stored in a safe place. You can make a calculation at the end of the month on all your deposits and withdrawals. Every discrepancy can be talked about with your bank. A lot of people find out they have forgotten to make a certain payment. One of the best ways to do this is to use a tool like Mint or, if you’re a business user, Xero.
  4. Watch out for unauthorized use – There is a big problem due to theft. It is necessary to keep your credit cards in a wallet, away from the other papers and cards you have. Don’t let anyone watch you over your shoulder when you’re doing your PIN either. Don’t ever give out your PIN either.
  5. Keep everything related to your credit card written down and stored in a safe place – If it’s ever missing, call your credit card company immediately. You don’t want to compromise anything or have the chance of someone stealing your credit card information or misusing it if you accidentally lose it. Your important information should never be used by anyone, even someone you trust. There is a large potential for abuse.

Andy is co-founder of CreditCardCompare, one of Australia’s leading comparison services where consumers and businesses can compare and review the best credit cards available on the market. Follow @thecreditletter on Twitter to get in touch with him.