You’re a Credit Card Owner. Now What?

Using Your Credit Card the Right Way

Step 4 – Make Your Payments on Time

You will learn more about making credit card payments in the next section, but for now, just know that you need to make your payments on time. You will have a billing date every month that you have to abide by. This will be based on the day you received your credit card. You must make some kind of payment before that date to avoid late fees and negative marks on your credit. If you have a way to pay the full balance of the card, then do so. If not, pay as much as you can. You do have the option of making the minimum monthly payment, which may be as low as $15. Doing this will add interest to the balance though, so it is best to pay more than that.

Fingers typing on keyboard, paying bills

If you cannot make the full payment one month, try to put more towards your balance as soon as possible. The lower your debt is, the less there is to charge interest on. If you are being charged 10% interest for a month, you’ll rack up less debt on $50 than you would on $500 ($5 vs. $50). You’ll quickly accrue more debt than you’re ready for by only paying the minimums.

Step 5 – Know When to Stop

If you feel that you are spending too much money on your credit card, put a stop to that. It is easy to become reliant on credit cards because they feel like free sources of money, but they’re not. The sooner you realize that credit cards are portals to debt, the better off you will be.

Bonus Step – Have an Emergency Fund

In addition to the tips above, you should consider saving money to use in an emergency. This money could be used to cover car repairs, finance last-minute trips, etc. You can rely on your credit card as an emergency fund, but early on, that may not be all you need. You won’t be able to cover a $1,000 plane ticket for a funeral if your card limit is set at $500. Put money away from every paycheck until you have enough to live off for 3-6 months, which is the recommended amount.