We can all agree that credit cards are extremely beneficial, after all they offer pre-approved credit that you can use anytime you wish to purchase items or pay bills. More importantly, they are the only way you can order things online. Unfortunately many of us use them improperly and rack up more debt than we can handle. The key is using them right and to their full potential,  but we’re not given a user’s manual on how to do that. Here are the top 5 things you can do to better use your credit card.

Stay Within Your Budget

It’s not the credit company’s job to make sure you spend within your budget. It’s yours, and yours alone, so this is perhaps the most important thing to always keep in mind. It’s very easy to go over budget when you start using your credit card, and many of us spend more than we should. Some things you can do to help yourself stay within your budget can include:

  • Using your card for essential purchases only.
  • Tracking your spending.
  • Paying your balance in full every month.
  • Staying within your credit limit.

Pay Off Your Credit Card Balances

Paying off your credit card balances is so important that we just had to mention it a second time. Unpaid balances add up, because credit cards usually charge high-interest rates. To give you a better ideas of why this is important, imagine you found a great deal on a new pair of shoes you’ve had your eye on for a few months. After a 10% discount the shoes cost you $180. You buy it on your credit card, which has a 20.99% purchase interest rate. Every month the cost of those shoes sit on your credit card, you are charged $3.13. This means that after 7 months those shoes you got a 10% discount on will cost you more than they would have if you paid cash and got them at their regular price. And let’s face it, many of us have way more than $180 balance on our credit cards, so the interest costs add up quickly.

If paying off your entire balance isn’t possible, try avoiding paying just the bare minimum payment as well.  The bare minimum payment generally just pays the interest charges, and doesn’t help you clear your debt.

Analyze the Benefits

Every credit card is different, and some are better than others. RateMyRewards exists to help you research which credit card is right for you, and that includes helping you discover which ones offer guaranteed privileges and perks that you can take advantages of. If you aren’t using the perks properly you are probably wasting the money you pay every year to renew the card. Some cards offer cash back, others low interest payments, travel benefits, rewards points, extra insurance and more. Take your time researching the credit cards before applying, and maximize your use of them when you receive it.

Be Aware of the Annual Fees

Some credit cards cost money to own. They may wave the first year’s fee to draw you in, but after that it’s up to you to pay it. Keep in mind how much the fee is, and what advantages the credit card offers to offset the charge. The perks should always outweigh the charge, and if they don’t, find another card. Also keep in mind that the free credit cards usually just offer credit at high interest rates, and not much else.

Keep Your Credit Card Information Safe

Keep your credit card information close to heart and safe at all times. Scammers exist, and are always looking for ways to get your credit card number, security pin, CVV number, passwords, expiration dates and more. Only use it on websites you feel confident in, and in person, always be aware where your card is and don’t just hand it off to someone else to swipe or tap for you.

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