Credit cards provide a valuable benefit to anyone unable to pay cash for a purchase. For example, a credit card allows account holders to borrow money to make retail or other purchases up to the card’s available credit limit. Responsible use is critical when using a credit card because irresponsible borrowing could lead to financial troubles.

Credit Cards and Debt

Using a credit card and not paying the debt could make the account more costly since the financial institution charges interest on the unpaid balance. For example, those whose cards present APRs with higher than average credit card interest rates may benefit from paying their cards’ balances each month. Those who cannot make a full payment might need to pay as much as possible to keep the balance and related costs as low as possible.

Only Borrow What You Can Afford

This common-sense advice is understood by many, but even those who realize the dangers of excess credit card use could borrow excessively. For example, if there’s credit available on the card, the card will process payments and cash advances. So, those without fiscal discipline could run up or max out their balances quickly. But, ultimately, if someone cannot afford an unnecessary purchase, it might be wise not to purchase anything. Doing so could lead to high balances and all the problems that come with them.

Rethink Plans to Apply for Multiple Cards

Someone who earns a modest income may apply for several credit cards and receive approvals. There’s nothing inherently wrong with having more than one or two credit card accounts. Unwise use of credit cards is what often gets people into debt trouble. Those who may struggle with keeping their borrowing to a minimum might wish to keep their numbers of cards low.

Shop Around for Better Cards

Sticking with costly cards could drain funds. According to Lantern by SoFi, “While the current average credit card interest rate across all cards is 14.51% APR, your APR can vary depending on several factors.” For example, effective credit card management may involve seeking cards with lower APRs and better terms. And transferring high-interest balances to a card with a lower interest rate might be worth considering.

Make Timely Payments

Proper credit card use also involves being a responsible payer. Skipping payments or paying late could lead to trouble, as the credit card company may level late payment fines and raise the interest on the card. Reviewing a card’s terms might be worth the investment. This way, the account holder knows the consequences of not making payments.

Credit Score Concerns

Late and missed payments could show up on a credit score, potentially making it harder to find low-interest cards or loans. However, a poor credit score may make approvals for financing harder to receive. Other serious problems could arise when a credit score drops. For example, problems and negative credit report marks may appear on a background check, creating possible problems for renters, job applicants, and others.

Credit cards allow people to finance purchases, and responsible creditcard use could make the process less costly. Borrowing within one’s means and paying on time are two examples of responsibility.