How Do You Use Credit Wisely

Category: Finance, Credit.

Credit cards are a near necessity these days, and they re much too easily abused. How do you use credit wisely?

Wise use of them means that they ll make your life a little easier and you won t regret what you ve spent your money on. The first thing to remember is to be honest with yourself about how you re using it. Most important in being honest about where you are financially and especially with credit is to look at the numbers. If you re going overboard and using your credit cards to hide the truth from yourself it s all too easy to end up in a financial hole that s near impossible to get out of. Are you really where you think you are? There s something you forgot when you decided that things were going well. Too often the answer is no, you aren t.

But if things are going nicely, it s a great feeling to know that you were right about your situation. Even if you have the credit, do you really need to buy everything you think you want? The second thing to remember is to not go overboard. Saving and investing is often a much better plan for the long term than spending freely. When money is tight it s easy to dismiss running up the credit cards because of holidays and birthdays. The third thing to remember is to not make excuses for what you spend.

If you can t afford to spend the money, perhaps you should cut back. The fourth thing is to make sure you are getting the best possible rates on any credit cards or other debts you re carrying. Other people will generally understand. There s no point in paying more for the money you owe than you need to. Credit card companies do sometimes increase rates without what you would think of as a real reason. Make sure your interest rates haven t been climbing for no good reason.

If your rates are going up for no reason, and the company won t lower them, remember that there are plenty of options out there. Finally, know your own weaknesses. Remind the company of that too, and be prepared to follow up and find someone who will offer more reasonable terms. Do you fall for impulse purchases often? Do you love to eat out? Do you just love spending money?

If you know where your worst spending habits are, you can address them. Set a budget for those things you don t want to give up on completely. Find ways to keep from spending excessively in those areas that really don t work well for you. It s often harder to give something up completely than it is to find a way to enjoy it in moderation. There should be some room for fun in most budgets.