How Do I Use My Credit Card?
I've been receiving few questions on the way I use my credit card. Honestly, I've been pounding with this same question including from my family members since few years ago. It seemed like most of them cannot process that I can be perfectly fine using a credit card, especially my parents for they are afraid that I'll get into a debt spiral. So, here's few pointers that I've been practicing ever since I had my credit card 7 years ago.
1. Expenses < Income
This is a cardinal rule that you need to ingrain in every cells of your body. Do not spend more than you could afford. If you couldn't abide this one rule, please say good bye to your credit card. For me, alhamdulillah, my expenses are usually lower than my income, though I did live with negative balance for few months T^T
2. Know your credit card spending limit
Aside of knowing the first point, you have to know your credit card spending limit. I'm not talking about the ones decided by bank but your own spending limit. I believe everyone should have a ballpark figure for their credit card spending limit. For me, CAD 800 is my sweet spot because that's the average of my credit card spending.
3. Always pay the full amount
Always, always, always pay the full amount whenever you use your credit card. Don't pay minimum amount only for that is going to be your doom as the interest will be accumulated.
Actually, I used to treat my credit card like debit card. I used to pay the amount that I used right away. For instance, if I used my credit card for my groceries in the evening, I paid the amount that I used at the same night. I don't do this anymore because my banking transactions are limited to 12 transactions only per month and I usually use my credit card more than 12 times a month.
4. Make full use of the interest-free period
I'm not sure how other credit cards work, but mine offers 21 days interest-free period. I surely am making full use of it. Like I mentioned previously, I used to pay whatever amount that I owed straight away. However, I stopped doing this due to limited number of transactions. Instead, I make sure to pay for everything within 21 days. To be exact, I make sure to pay for everything on the 14th day, maximum.
As you can see, I don't do anything special. I just use it and make sure that I pay for it. That's all.