How To- Use a Credit Card

Okay, so the obvious answer is “you just swipe the credit card and go”.

But, seriously, what is the best way to use a credit card? The answer is equally simple:

Use a credit card as if it were cash.

When you make a purchase on a credit card, be sure you can pay off the purchase before your statement end date. Yes, most people wait until the statement arrives in the mail and then hope they can pay off the balance in full. But, the better strategy is to pay off any purchases you have made on a weekly or bi-weekly basis.

If you have an unexpected expense- and that big screen television you have been wanting is NOT an unexpected expense- plan to make regular payments IN ADDITION TO your regular purchases until the balance is paid in full. This may mean cutting out your cable service for the short term or cutting back on eating out or any other discretionary expense that does not bring you overwhelming joy until your credit cards are paid in full. The part two of this strategy is to start building your savings so you do not have to rely on your credit cards to survive. You were created to thrive, not survive and struggle. If you need guidance on budgeting and allocating your income, please see “How To- Allocate Your Income” and “How To- Create a Budget”.

So, how NOT to use a credit card? Do not use a credit card as a crutch to buy things you do not have disposable cash for. This includes the “basics” like housing, utilities, food, or anything else. If you are having difficulty bridging the gap between your income and your expenses, read “How To- Create a Budget” and “How To- Pay Off Credit Cards”. You WILL have to make some changes in your life. The life you have been living is what got you where you are so you cannot expect to live the same life and have anything change. The good news is that you CAN turn your life around and make it amazing in the future (“How To- Take Your Life to the Next Level”).

I am not going to advise you to give up your credit cards or put them in the freezer like it is a jail. Credit cards are a wonderful tool and can make your money work for you if you have a rewards credit card. Credit card rewards can pay for your vacation, a car, your Starbucks habit, or anything else you value in life. My only advice is to use your credit card(s) to bring more value to your life. Do not let your credit card(s) use you as a revenue source.

Action Steps:
1. Use credit cards like debit cards or cash. Only use credit if you have the cash on hand or in your bank account.
2. Have a savings account you can use for unplanned expenses. Use your savings to pay off these credit card charges.
3. Pay off credit card balances as soon as possible.
4. Do NOT use your credit card to bridge the gap between income and expenses. Either cut your expenses or increase your income.