credit card

7 Tips To Use Credit Card Responsibly

July 17, 2023

Credit card have become a helpful tool in the life of many Canadians. It makes it possible to make purchases without necessarily owning any money at that moment. They can also help you build credit and earn rewards for your spending.

However, if not used responsibly, credit cards can throw you into debt, increase your interest payable, or even dampen your credit score.

So how do you use your credit cards properly and take control of your finances?

Here are 7 tips to get started.

1. Understand Card Agreement and Terms

Ensure to carefully read your credit card customer agreement once you open a new credit card account. This is important so you can understand what to expect regarding your due dates, fees, interest rates, and other information from your credit provider.

2. Understand How Interest is Calculated

Understanding how your credit card interest is calculated is a good step to becoming debt-free. Most credit cards accrue interest based on your average daily balance.

It’s always best you strive to make more than the minimum payment and if you’re carrying a balance, try to make your payment as soon as possible to reduce interest payable.

3. Pay Balance in Full Monthly and on Time

Paying off most or the full debt on your credit card by the due date every month shows lenders that you’re a credible borrower. If you don’t pay your balance by the due date, you risk:

  • Reducing your credit score.
  • Losing the benefit of any promotional rate offer you have.
  • Your financial institution canceling your credit card.
  • Your credit card balance insurance getting canceled by your credit card provider.

Setting up automatic payments or electronic reminders will help you make sure you pay on time.

4. Avoid Impulse Purchases

Buying stuff without planning is one habit you may need to deal with when you have a credit card. To lower impulsive buying, you should only use your credit card for managing short-term cash flow.

So, before you swipe that card, ask yourself; “Do I need this item now or can I wait until I can afford it?” Don’t be a swipe away from bankruptcy!

5. Review Your Statement

Regular review of your credit card statement will help keep spending under control and to spot any reconciliation errors. It’s best to keep receipts of all your purchases so you can compare the amounts against your statement. In the case of a double charge, report to your issuer.

6. Keep Your Personal Information Confidential

Keep your card, Personal Identification Number (PIN), Card security code (CVV number), and password highly confidential. Protect them at all cost! If you share your PIN or card security code, you may be held financially responsible for any unauthorized transactions.

It is also advisable to use strong passwords and avoid using predictable passwords like your birthday, pet name, favorite color, or food.

7. Report A Lost or Stolen Card Immediately

If your card is missing or you suspect someone stole your account number, report it to your card issuer promptly so it can be deactivated.

Also, you can inform the issuer or your financial institution about unauthorized or unfamiliar transactions you may have observed from your credit card report.

FINAL THOUGHT

We hope you find these tips useful and start practicing them. Take charge of your financial life today!!