It certainly takes a lot to be a responsible credit cardholder. At the same time, this is really not a difficult end objective if you have some insight into what it takes.
All it takes is getting used to the idea of being timely and reliable. Once you start doing so, there is really no looking back.
With that thought in mind, we offer you 6 priceless tips on being a responsible credit cardholder.
Pay Your Credit Card Dues on Time
The first and foremost condition of being a responsible credit card holder is to pay your credit card dues on time. There are simply no loopholes about this aspect; you have to ensure that every time, your bill is paid when it is due.
In case you do not have enough funds to pay your entire bill within the due date, you MUST be able to make the minimum payment at least. Take this to be a cardinal rule that you simply have to follow without exception.
The moment you start falling back on your credit card payments, banks start viewing you as an irresponsible credit cardholder. Remember that this goes against the very premise of this article – which is to ensure you remain a responsible credit card holder.
Pay Your Credit Card Dues in FULL
The next most important aspect of being a responsible credit card holder is to pay your credit card dues in full without letting outstanding amounts spill over into your next billing cycle.
While banks may not mind you doing so (that is when they will earn interest from you on the outstanding amount!), it again conveys irresponsibility on your part.
The key is to ensure that you only spend as much on your credit card as you are able to pay off in full at the end of your billing cycle, once the due amount comes up for payment.
We fully understand that things don’t always go as planned; but this should be a rare exception, certainly not a rule.
Use Your Credit Card Thoughtfully
Every single purchase made on your credit card should be backed by adequate thought. Are you sure you will be able to pay for the item you just bought, once it will be due for payment?
Not only that, but you should also think about the necessity of the item you are purchasing.
A good rule of thumb is to make credit card purchases for the things that you need, not really the things you want. Electricity or gas at home, for example, are things you genuinely need, while the $2,000 mink coat you just saw at the fashion store on your way to work is something you want – one you can easily do without.
Once you approach your credit card purchases with this thought process, you will find discipline and responsibility automatically coming into the overall scheme of things.
A Responsible Credit Card Holder Sparingly Uses the Available Credit Limit
Every credit card comes with a predefined credit limit; it could be a little or it could be a LOT; ultimately, it is really an individual perspective.
Now, as far as credit card responsibility is concerned, it is expected that you sparingly use the credit limit that is available on your credit card.
Is there a figure to define “sparingly”? Well, yes, there is. Typically, 30% is considered a fairly responsible amount to utilize on a credit card. So, if your credit card comes with a $2,000 credit limit, it would be considered responsible to curtail your spends around or below $600.
Yes, if your income allows it – and you know you can ideally repay the entire outstanding amount by the due date – you could certainly go ahead and spend more than 30%.
Yet, it is advisable to remain around the 30% mark; that is when you are considered to be a truly responsible credit card holder.
Choose Your Credit Card Wisely
Today, there are literally hundreds of different credit card options out there. Banks are falling all over themselves to offer customers a wide choice of credit cards from which they can make a suitable selection.
As a responsible credit card holder, you must ensure that you choose your credit card wisely, with adequate time and effort going into making that selection.
To give you an example, if you shop frequently on a particular online store – and your bank (any bank for that matter) is offering a credit card co-branded with that particular online store, it clearly makes sense for you to choose that particular card.
Another example would be that of air miles, especially if you are a frequent flyer and possibly, additional points accrue to your account when you fly with your favorite airline – one you already fly with quite often.
Credit Card Responsibility Mandates NOT Having Too Many Credit Cards
A final priceless tip would be about the number of credit cards that you should have as a responsible credit cardholder.
The basic thought you need to keep in mind is that having too many credit cards is never a good idea; there will be just too many payments to manage, billing cycles to keep track of, and due dates to keep pace with.
Moreover, you will spread all your benefits such as air miles, reward points, etc. way too thin, such that they will never really add up to a lot on a particular card.
That is the reason we always recommend that you should curb the number of credit cards you hold.
While there is no strict number as such, two to three credit cards should be more than sufficient to ensure you are well prepared at all times for making credit card spends as and when you need to. In most instances, going beyond that is excessive and can easily be forgone.
Meticulously follow the 6 priceless tips mentioned above, and you will be on your way to being a responsible credit card holder, like a pro!