Owning a credit card makes life a whole lot easier. From having access to your money at all times, to enjoying the ease of online shopping and the comfort of a stable backup plan in the event of an emergency. Other benefits include building your credit score and reward points or even cash back. Credit cards are awesome. If you’re smart about it.
With Great Power Comes Great Responsibility
To avoid digging yourself into a nasty pit of credit card debt, simply follow the cardinal rule. The purpose of credit cards is to assist in smart money management, not to make it possible to buy things you can’t afford.
This is easier said than done, of course, and we’re all guilty of splurging now and again with an eye on “paying that off next month” but keep a close tab on your balance, it can creep up faster than you think. A good rule of thumb is to keep your balance no higher than one week’s salary.
So yeah, go ahead and pick up those Lululemon yoga pants but don’t forget that every item you purchase will eventually need to be paid for -- with interest!
Keep Track of Transactions and Read Your Monthly Statement
Poring over your credit card statement with a fine-toothed comb looking for errors makes you feel like a crotchety old fuddy-duddy, but too bad. Mistakes happen and you don’t ever want to pay for something you didn’t buy. Period.
So bust out those reading glasses and go to town. While you’re at it take a good look at all the purchases you did make. This gives you a chance to learn about your spending habits and pinpoint opportunities to cut back. Spot 35 lattes over a one month span? Perhaps it’s time to invest in your own espresso maker.
If you’re super smart you won’t wait for the end of your billing cycle to roll around. If you use your card a lot it’s not a terrible idea to check your account online once or twice a week.
Credit Card Safety: Basic Training
If you dot your i’s and cross your t’s there’s no reason you should ever be a victim of credit card fraud. Here are five no-brainer tips for keeping your account safe:
- Sign the back of your card as soon as you get it.
- Never keep your PIN in the same place as your card.
- Hide your card number from strangers in public.
- Don’t give your account number over the phone unless you initiated the call.
- Watch out for phishing emails asking for your card details or personal information.
Many merchants offer an “add the tip” option at the end of your credit card receipt. If you’re not interested in leaving a gratuity be sure to draw a line through the empty spaces. Otherwise a cheeky waiter might just play fill-in-the-blanks and give themselves a little something at your expense!
Now that you’re all grown up it’s time to buy a shredder, too. Shredding old receipts and statements is not only smart credit card practice it’s killer fun as you can imagine you’re covering up some big time Wall Street scandal.
Keeping Safe in Cyber Space
Nowadays we make just as many purchases online as we do in the real world. Amazon Prime anyone? It’s best practice to only shop with reputable merchants with secure websites (check for https: in the address bar).
Keep your internet browser up to date and verify that your computer’s firewall is turned on. Avoid making purchases from a shared computer.
Proper management of your credit card can lead to making smarter financial decisions and reaping plenty of reward perks. All you’ve got to do is stay diligent and be responsible.
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