Credit card debt has been a major problem in this country for a long time. It would almost seem as if people don’t know how to use their cards in a way that helps them. People use credit cards to live beyond their means and buy things they can’t afford. Sadly, the trend is proving true. Americans are saving their credit purchases for something big.
Of course, a person can use their credit cards as they wish. It’s their card and their credit. But there is a smart way to use them that enhances your credit. The other way can hurt you in the long run. People are waiting to use their credit cards until they want to make a larger purchase. The reason why has more to do with time.
Using Cash and Not Credit Cards
It takes longer to use your credit card than a debit card. Signing for your purchase at the end is longer than just inputting your pin. So, those impulse items at the counter, like gum or chapstick, we rarely use our credit to purchase. It’s not worth the time it takes to use the card for the smaller purchases.
“Many people are still going to use cash because it’s so much simpler,” says Certified Financial Planner Pam Horack. “You whip out a five, get your change and you’re good to go.” Another reason is, it’s harder to keep track of smaller purchases that way. It’s easier to use cash for those types of items.
How to Use Credit Cards to Build Credit
If you’re struggling with your debt, using credit cards to make larger purchases can hurt you. Really, the best bet for building your credit is to not take the chance. Buying things you can’t afford is never the smart answer. Rather, spend your credit on the smaller things and keep track of it.
The reason is sound. Using a little bit of credit makes it easier to pay off your cards each month. That means less interest accumulates on your purchases. It means your credit has a better chance at showing 100% on-time payments. That will look more favorable on you when it’s time to buy a house or a car.
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Responsible Credit Card Use
According to Experian: “Having at least one credit card and using it responsibly is a key way to build credit, along with maintaining a solid track record of making loan repayments on time.” If you find that your purchases do not have this effect, then your credit might be souring. Maintaining a good credit score is essential for many important aspects of American life.
