Despite what people always say about credit cards, not everything is correct. Always take information with a grain of salt. Whereas many people might discourage you from getting yourself one, a credit card can be quite useful if you use it in the right way.

When used correctly to build your credit history, a credit card allows you to get a loan with a favorable interest rate, new cellular plan, and even cheaper insurance.

Forget about the naysayers; this is some of the best advice you can hear about credit cards.

credit cards

1. Avoid Racking Up Large Interest Charges

If you are not careful with your credit card, you can sink into overwhelming debt in a short period of time. When starting out, your credit card limit will be low, but it can rise with time. In most cases, this causes overcharging temptations.

In most cases, paying your debt will be very difficult because, as the balance climbs, interest also compounds. Thus, payments will increase in return. Due to this fact, you will find yourself with less money to spend on your current and future expenses. Therefore, you should pay what you owe, when you owe it, so you don’t end up in debt.

2. There is No Need to Owe!

Using your credit card and staying out of debt is very much possible. You may ask, how can I achieve this? You can achieve this by only charging what you can comfortably pay when the bill arrives.

Always use your credit cards as a form of payment instead of a revolving debt instrument. To achieve this, always keep track of your cash flow and charges. Though you may have a high credit limit, contain your spending to what will fit in your budget.

3. Debt Will Always Affect Your Credit Score

Not only is it advisable to stay debt-free, but having high balances also negatively affects your credit score. To maintain a high score, ensure that your balance is consistently under 30 percent of your credit limit. Most finance experts usually advise that we should keep our credit usage as close to zero as we possibly can.

Always pay your credit card on time. If you lag and skip even one billing cycle, after 60 days, your creditor will report the delinquency to credit reporting bureaus. This can drop your score tremendously.

Dare miss more payments, and your score will sink even further. What’s worse, those negative marks can’t fall off for a full seven years. Set reminders so you never miss a payment!

4. Come Up with a Repayment Plan

It doesn’t matter how much money you have, with a steady plan and commitment, you can come out of that debt. Experts advise us to do some of the following:

  • Avoid impulse shopping – when you’re in debt, only buy essentials
  • Ask creditors if they can help reduce the interest rates – you’d be surprised, there might something the bank will do to help
  • While in repayment mode, suspend charging – stop using your card until you have effectively paid off your debt
  • Pay high-interest balances first – this will help you limit the amount of interest you pay over time

5. Always Ask for Help if You Can’t Make a Repayment

Though your bank has no obligation to accept less than the minimum payment, you shouldn’t be worried about this. You can work together with your bank to agree on a particular payment plan. If all of the above is not possible, then consider getting a credit counselor.

Armed with this knowledge, there is no reason you can’t build an outstanding credit score. If you are still skeptical, consult your credit card company for more guidance on how you can have and maintain a healthy credit score.