Using a Credit Card

Managing credit card use can be a real challenge. Here are seven rules you can follow to get the most out of your credit card at the least cost:

  1. Limit the number of cards. Using just one credit card will make it easier to keep track of what you are charging. At most, you might use two — one for everyday purchases that you pay off in full each billing period and one for occasional larger charges, such as an appliance, you might pay off over a few months.
  2. Charge only what you can afford to repay in full each month. If you have a card with a grace period and you pay in full and on time, using credit won't cost you anything.
  3. Keep your credit limit low and always keep your outstanding balance well below your credit limit.
  4. Keep records and track your spending. It is important to monitor your spending regularly, not just once a month when you receive your billing statement.
  5. Every time you're ready to use your credit card, ask yourself: "Is borrowing money really necessary, or can I pay some other way?"
  6. Never charge something for other people or pay for a group expense, even if everyone promises to pay you back.
  7. Avoid taking cash advances with your card. The interest rate on cash advances is higher — sometimes much higher — than on purchases. There's no grace period, so you owe interest from the time you withdraw. And there's usually an extra fee too.