Cherish Your Credit Card

Summary: Does your spouse or partner ever complain about you spending too much money? Or perhaps you have more shoes, clothes or cosmetics than you could possibly ever wear? Maybe you have to own every new gadget before everyone else in your neighbourhood? If you answered "yes" to any of the above questions, you may well be an impulse spender and guilty of indulging yourself in a dangerous form of retail therapy...

Holding one or more credit cards accounts can be a very convenient way of handling your finances in today's society, and while there are definite advantages to having the extra credit facility, it is important to exercise a level of control in the way you use these accounts. A good rule of thumb to keep in mind when using a credit card account is to never owe more on your card than you can easily pay off within three months. Now that level of commitment can change month to month so it's worth while to fluctuate your own maximum use of the card even if the issuer has given you a higher threshold. 'Maxing up' your credit card is never recommended for the simple reason that once you are unable to use the card for the reasons it was intended, then making the payments on it will hurt you that much more. Impulse spending, simply because you have space on your credit cards can lead you into a very dangerous financial mess, and you therefore need to avoid the self indulgence, and stop buying things you didn't know you wanted until you saw them on display in a store. You really should have a good idea of how much you have used the card during each month even before your credit card bill arrives on your doorstep. If you are ever surprised at how much more you charged to the card than you thought you had, that is usually a good sign that you are using it too much. It is always tempting when we look at how much 'space' we have on our credit card, to regard that as money to be spent, and feel obliged to indulge ourselves, often buying goods we don't need and would never have purchased with money saved in a savings account. You should also remember that any amounts you are obliged to spend on your credit card bill payments, will often prevent you from increasing your savings for more important things like holidays, a new house or car or even your retirement. Here are a few good guidelines to implement when using your credit card facility. Keeping these suggestions in mind will ensure that you don't create problems that may affect your lifestyle to say nothing of your credit score. 1.) When using your credit card to pay for any item, simply ask yourself if you really need it, or just want it. Separating needs and wants is an important spending issue and all your purchases should be justified, at least in your mind. 2.) When you go shopping, make a list of what you need and either take only enough cash to pay for what you have planned to buy, leaving your credit cards at home, or decide what you will charge to the card before you leave home, and stick to that figure. 3.) If you see something you think you really need, give yourself two weeks to decide if it is really something you do need or something you can easily do without. Very often, you will decide during that grace period that you didn't really need the item in mind, and your life will roll on just as well without it. 4.) Discipline yourself into not buying anything whilst you are out shopping that you didn't think about before you left home. 5.) Remember that you will be under great pressure to charge your card to it's limit, not only from the advertisers who want you to buy their products, but also from the issuers who make money every time you use your card. Always resist the temptation! You must set some financial goals and stop spending money on items that really don't matter in the long run. 6.) Don't use your credit card to draw cash either from a bank or ATM unless it is absolutely necessary, as this is a very expensive way of putting cash in your pocket. Make sure you read and fully understand the small print with regard to use of your credit card, and in particular, the charges your issuer will impose on cash withdrawals. The pressures created by credit card debt are enormous. Impulse spending can have an adverse effect on your health, your relationships and your creditworthiness, and you owe it to yourself to treat all three with total respect. Try to just use your card for items you know you can afford to pay for when the card bill comes in at the end of the month. That way your card facility will often cost you nothing. Paying the minimum payment on a credit card is fraught with danger and will cost you dearly. If you follow these basic rules when using your credit card account, you will protect your lifestyle and relationships and at the same time, keep your credit score safe. Trevor Taylor