There are many benefits of using a credit card, including the ability to better organize your finances and make large purchases with confidence. Just the same, if you overdo it, you could find yourself in financial trouble.
Here are a few tips that can change the way you use your credit card:
- Pay off your balance: Rather than carry a balance, pay it off when your statement comes due. This allows you to avoid finance charges, saving you a lot of money.
- Don't miss a payment: Not only does this result in a finance charge, but you can expect a late fee as well. Furthermore, depending on how late you are, it could lead to a red mark on your credit report.
- Buy things you need, not things you want: Many people make the mistake of using a credit card to purchase things they really can't afford. Avoid doing so by asking if it's a want or need before purchasing.
- Watch your total credit limit: As a general rule of thumb, strive to keep your credit utilization ratio below 25 percent. For example, if you have a $10,000 credit limit, don't let your balance exceed $2,500.
It's not always easy to follow these tips, but doing so can change the way you use your credit card.
If you've run into trouble, such as a mound of credit card debt that you can't pay off, you'll want to consider your options. For example, filing for Chapter 7 bankruptcy may be just what you need to eliminate your debt and start fresh.