HEALTHY CREDIT HABITS
Having trouble in maintaining your credit score? Begin by developing the required credit habits. Here’s how:
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It is important to learn the rules of the game. All you need to do is to remember simple dos and don’ts of credit card usage and in time, you can learn to adopt the healthy spending habits in your financial life.
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1) Avoid using the credit card for daily items. Many of us use our credit cards to make our everyday purchases like groceries, petrol and clothing. It is convenient to use the card when not having cash on hand. However, buying simple everyday items using the credit card can develop into a habit where you may tend to substitute a credit card with cash and use it without keeping track of how much has been charged to your card. It is always advisable not to use your credit card for everyday purchases but instead use your cash or a debit card.
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2) Avoid making minimum monthly payments. The next thing you do not want to do is develop a habit of making minimum-only payments. If you make minimum payments each month, you are only increasing the length of time it will take for you to pay off your debt. Additionally, it will also increase the amount of interest you could end up paying.
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3) Spend within your means. If you are one of those people who usually buy things that are way off your budget, remember not to use your credit card to buy things you cannot afford. One way to get into debt is living off borrowed money.
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4) Weigh your wants and needs. Learn how to make correct decisions when it comes to buying items you need against those you simply want. A new washing machine to replace the malfunctioned one is a need as opposed to the Louis Vuitton bag sitting on the shelf of the shop
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5) Never exceed your credit limit. The safest is to stay within at most 30% of your credit limit. It is important to keep your balance low in order to preserve a good credit standing to be eligible for future loans.
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It is easy to keep to the rules and not fall into credit card debt. The best thing is to leave the card at home when you don’t intend to shop for expensive products to avoid being tempted in using it impulsively to purchase luxury items. Â
February 6th, 2010
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