Yes, responsible credit card use does exist

10/04/2016


I am a reformed credit card abuser. Credit cards caused me to rack up over R60 000 in debt, because I was not disciplined about their usage.

After that episode of my life, I decided to never have one again.  But six six years back, when I had to travel overseas, I realised that I might need one. Just paying for travel insurance feels like robbery considering that it's free with a credit card. So I did my homework and found one that is suitable for me. It's not perfect but it works.

Here is how I  keep being responsible with my credit card: 

Decide why you need one
Get yourself a credit card with a low annual fee and low interest rate. Since credit cards have some use, I got myself a Virgin credit card and it's the only card I own. I also called them to reduce my credit limit. My card had R50 000. Honestly, I don't need that much. What I like about them is that there is no monthly or yearly fees. They have discounts on certain companies but that's not a reason I use the card. I use it for my biggest purchase which is for flight tickets and I get free insurance with every purchase. So that works for me.

Limit the number of cards you open
When you limit the number of credit cards you open, you reduce the urge to use credit for too many of your purchases. I only have one credit card. Again go back to your why, why do you need the credit card. When you've determined why you need it, you'll be fine.

Read the fine print
Unlike the first time I got hold of a credit card, I am very much aware that my credit card is not free money. When I am using the credit card, I am basically borrowing the money from the bank. So before I use my credit, I think about the cost of the purchase and how I'm  going to repay it. If I can't repay it in full, I don't use it. I just save until I have the full amount.  And I always pay the credit card balance in full each month to avoid interest and fees.

Find alternatives 
To keep my credit card spending under control, I use cash or my cheque account for everyday purchases and use my credit card for buying larger items. Research has shown that people spend more money when they use credit cards than when they use cash. If you stick to your cheque or savings account you will be fine. After all it's money that you already own. When you use your cheque or savings card, the money is deducted directly from your checking account.

Remember if you misuse your credit card, you will quickly find yourself in a mess of debt, fees, and high interest rates.

Using your credit cards in a healthy and responsible manner will lead to convenience and flexibility.

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