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How can I smartly use a credit card to avoid debt issues?

On Behalf of | Jun 2, 2021 | Firm News

Credit card debt can quickly accumulate and lead to financial troubles. The problems usually stem from people not understanding how to smartly use them.

According to Credit Karma, credit cards can be a great way to build your credit as long as you follow a few rules about using them.

Avoid reaching your limit

You should never reach your credit card limit. In fact, it is best to not even come close to it. Ideally, you want a 30% credit utilization rate total, so try to use that as a guideline for how much you can charge on your card.

Pay in full

You should always aim to pay off your credit card bill in full every month. It is a good rule of thumb to follow so that you can avoid paying interest and other fees associated with carrying a balance.

Pay on time

Another thing to always do is pay your bill on time. Some companies will offer forgiveness for one missed payment, but after that, they will hit you with fees. Plus, late payments affect your credit score negatively.

Never charge more than you can afford

You should never charge anything that you could not afford to buy with cash. If you live beyond your means, it will catch up with you. The biggest mistake people make with credit cards is using them like they are extra money. The best way to look at a credit card is that it is an advance on your paycheck.

If you follow these rules, you can usually avoid severe debt issues and credit card balances that are too high for you to control.