{"id":3082,"date":"2021-01-05T00:24:36","date_gmt":"2021-01-05T08:24:36","guid":{"rendered":"https:\/\/www.cashry.com\/blog\/?p=3082"},"modified":"2023-02-24T09:07:44","modified_gmt":"2023-02-24T17:07:44","slug":"how-to-use-credit-card-responsibly","status":"publish","type":"post","link":"https:\/\/www.cashry.com\/blog\/how-to-use-credit-card-responsibly\/","title":{"rendered":"How to Use a Credit Card Responsibly"},"content":{"rendered":"<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1280\" height=\"720\" src=\"https:\/\/www.cashry.com\/blog\/wp-content\/uploads\/2021\/01\/how-to-use-a-credit-card-responsibly_2.jpg\" alt=\"\" class=\"wp-image-3330\"\/><\/figure>\n<\/div>\n\n\n<p>Nowadays having a credit card is normal, and everybody uses it for so many reasons. However, so many people don&#8217;t use it responsibly, leading to debt and bad credit score. <\/p>\n\n\n\n<p>Few days ago, wandering online, I read this quote in an analysis of what some are calling the &#8220;hollow middle&#8221; of the American Dream: <\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>Forty years ago, the term \u201cmiddle class\u201d referred to Americans who had successfully obtained a version of the American dream: a steady income from one or two earners, a home, and security for the future. It meant the ability to save and acquire assets. Now, it mostly means the ability to put your bills on autopay and service debt. The stability that once characterized the middle class, that made it such a coveted and aspirational echelon of American existence, has been hollowed out.<\/em><\/p>\n<cite><em>Vox.com<\/em><\/cite><\/blockquote>\n\n\n\n<p>Sobering words. Unfortunately, many of us can probably relate. How often have you considered it a \u201cwin\u201d if you can simply keep up with monthly expenses and avoid being completely overwhelmed by debt? It\u2019s like we\u2019re no longer trying to reach goals so much as just keep running. If we\u2019re on our feet instead of face down on the track, that\u2019s the best we can hope for!<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Goalry 30-Day Free Program to Financial Independence\" width=\"1140\" height=\"641\" src=\"https:\/\/www.youtube.com\/embed\/x0nCj9LMJqo?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">How to Use a Credit Card Responsibly<\/h2>\n\n\n\n<p>I\u2019m not sure it is, but that\u2019s a conversation for another day. At the moment, I\u2019d like to spotlight one particular aspect of this sort of month-to-month survival \u2013 \u201c<em>responsible<\/em>\u201d credit card use. I put it in quotes because the term itself is worth considering. Is it using a credit card responsibly if you\u2019re not maxed out and still able to make your monthly payments? What about if you have a little room left and you pay more than the minimum each month, even though the full balance is never, ever, ever going to go away? Have I proven I can use a credit card responsibly if the issuing company keeps raising my credit limit?<\/p>\n\n\n\n<p>We\u2019re going to look at several versions of what might constitute \u201cresponsible credit card use.\u201d Indeed, not every expert agrees on what this looks like. I\u2019m not looking to argue with anyone in particular, but I should confess up front I\u2019m not as dogmatic as some. In my experience, life is a little more complicated than we\u2019d like it to be and we sometimes have to look at what\u2019s <em>practical<\/em> as much as we do what\u2019s <em>ideal<\/em>.<\/p>\n\n\n\n<p>With that in mind, let\u2019s talk about how to use a credit card responsibly by looking at <strong>several different definitions<\/strong>. What makes the most sense for you, of course, is for you to determine.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Option #1: <strong>Don\u2019t Use Credit Cards<\/strong><\/h3>\n\n\n\n<p>Several of the most respected financial personalities in the U.S. would argue that \u201cresponsible credit card use\u201d is a paradox to begin with. You can\u2019t use a credit card responsibly because it\u2019s irresponsible to use credit cards, period! Clearly this resonates with a lot of people, since those saying it are selling millions of books and videos and online courses and coffee mugs and whatever else. Hey, more power to them.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Some Say You Don\u2019t Need One at All<\/h4>\n\n\n\n<p>Some, like Dave Ramsey, aren\u2019t sure you need a card at all. <strong>Manage your budget, keep enough in savings, and dial back what you think you need, and you\u2019ll be fine<\/strong>. Most reasons for having a credit card aren\u2019t reasons at all, he insists \u2013 they\u2019re just excuses.<\/p>\n\n\n\n<p>And this advice doesn&#8217;t only apply to those in needs, it applies to everybody, and even those who think that using their cards collecting rewards, miles, &#8230; will help them make some money!<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><strong>You don&#8217;t build wealth&nbsp;with credit card&nbsp;rewards&nbsp;and&nbsp;airline miles.&nbsp;You&nbsp;can&#8217;t beat the credit card companies at their own game.<\/strong><\/p>\n<cite><em>Dave Ramsey<\/em><\/cite><\/blockquote>\n\n\n\n<h4 class=\"wp-block-heading\">Some Others Think You Should Have One if Need Be!<\/h4>\n\n\n\n<p>Others recommend keeping a card or two for emergencies. In this scenario, you don\u2019t carry it in your wallet or purse. It stays locked up at home somewhere inconvenient and secure unless absolutely necessary.<\/p>\n\n\n\n<p>This one is certainly doable, but there\u2019s a tradeoff in terms of convenience. We live in a world which assumes, for better or worse, that adults have credit cards and expects us to use them. If you want to be able to book travel, shop online, order carry-out, or rent anything from a car to a DVD, chances are good you\u2019re going to be asked for your credit card information. <\/p>\n\n\n\n<p>Of course, many of these scenarios can be handled just as well with a debit card. But not all of them. And there are limits to what your debit card can do unless you have sufficient funds in your account to cover everything.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><strong>I don&#8217;t use a debit card. The safest thing is a credit card because you&#8217;re using the bank&#8217;s money. If someone accesses your information, they are stealing the bank&#8217;s money, not yours.<\/strong><\/p>\n<cite><em>Frank Abagnale<\/em><\/cite><\/blockquote>\n\n\n\n<h3 class=\"wp-block-heading\">Option #2: <strong>Pay Off Your Balance Each Month<\/strong><\/h3>\n\n\n\n<p>It\u2019s hard to argue with this one in theory. What could be more responsible than using credit cards for the security, flexibility, and rewards they offer while carefully budgeting so that you never pay a dime of interest, let alone penalties or late fees? It\u2019s the best of both worlds! Shop online? No problem. Book hotel rooms or buy tickets? Done! Go cash-free at the mall, grocery store, or wherever else? Easy-peasy!<\/p>\n\n\n\n<p>And imagine all the cash-back, discounted purchases, travel miles, or whatever else you can accumulate. Good times.<\/p>\n\n\n\n<p>Depending on which research you use, somewhere between 33% &#8211; 40% actually pay their credit cards in full each month. That\u2019s pretty impressive until you realize those same numbers means somewhere between 3\/5 and 2\/3 of us <em>don\u2019t<\/em>. We\u2019re using the cards, but we carry a balance each month. It doesn\u2019t take long before we\u2019re sliding into the typical American muck and mire of endless credit card debt. Depending on how much you actually pay towards your balance each month, it\u2019s easy to end up paying interest on the same money over and over, and then pay interest on that interest, and so forth.<\/p>\n\n\n\n<p>In short, if you\u2019d like some cutting-edge free financial advice, paying off your balance each month is a <strong>great way to use a credit card responsibly<\/strong> \u2013 if you can actually do it consistently, every time, without fail. Otherwise, it\u2019s a great way to convince yourself you\u2019ve got everything covered while setting yourself up for major problems.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"7 Top Low Interest Credit Cards: Get the Lowdown\" width=\"1140\" height=\"641\" src=\"https:\/\/www.youtube.com\/embed\/NDmVEFEig88?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">Option #3: <strong>Limited, Strategic Credit Card Use<\/strong><\/h3>\n\n\n\n<p>This one can look quite different from person to person. The basic idea is that you <strong>avoid using your credit card for impulses or conveniences<\/strong>, but use it for specific types of purchases or in certain situations. The key here is not so much which purchases or situations as it is being genuinely strategic.<\/p>\n\n\n\n<p>There\u2019s a scene in the 1994 movie \u201cReality Bites\u201d in which Winona Ryder has been given a credit card by her father specifically for putting gas in her car. (<em>If you\u2019re old enough to remember cards specific to a particular gas station chain, this echoes those days.<\/em>) Ryder spends the day at the pumps, charging gas for strangers and taking their cash instead \u2013 thus beating the system. It\u2019s an amusing scene, but doesn\u2019t quite qualify as the sort of strategic use I mean.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Example of Young Adult Credit Cards<\/h4>\n\n\n\n<p>Let\u2019s say, for example, that you have a teenager at home, or a kid almost ready to go off to college. You want them to learn how to use a credit card responsibly and you\u2019re looking for the appropriate balance between trusting them with financial tools and setting them up for major crash-n-burn debt trouble. Maybe you\u2019ve start them with a card designed for young adults to grow into, while they\u2019re still at home and easily monitored. Then, when they head off to college, you add them to one of your cards with specific instructions.<\/p>\n\n\n\n<p>They can use the credit card for textbooks, on-campus meals, and a set amount of personal entertainment each month. You still get the statements, so it\u2019s easy to know whether or not they\u2019re staying within the guidelines. This allows your young adult to have some of the freedom and conveniences of plastic while still working within clear limits. Ideally, this makes it easier for them to grow into responsible credit card use on their own once they\u2019ve graduated.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Example of Vacations on a Credit Card<\/h4>\n\n\n\n<p>Or, perhaps you have a few cards you keep locked in your desk or fire safe at home. You\u2019re saving for a family vacation, but you know some of your trip will go on the cards as both a practical and a financial convenience. You set a budget in advance and figure you should have them paid back to nothing within six months of your trip. Then \u2013 and this part is important \u2013 you follow through and do it that way. Or you keep a card in reserve for unexpected repairs, medical expenses, or legal bills. You get the idea.<\/p>\n\n\n\n<p>I\u2019m not saying there aren\u2019t other options. You don\u2019t have to have credit cards to pay for textbooks or go on vacations. As a matter of reality, however, these are things people often use plastic to pay for. Rather than going full all-or-nothing and shaming one another for the practice, we can at least look for ways to be a bit more pragmatic. We don\u2019t live in theory, after all \u2013 most of us are trying to navigate the real world as best we can.<\/p>\n\n\n\n<div class=\"cashr-content_3 cashr-entity-placement\" id=\"cashr-2546740430\"><div id=\"cashr-1075171785\" style=\"margin-left: auto;margin-right: auto;text-align: center;\"><div> <script type=\"text\/javascript\" src=\"https:\/\/embed.hifiona.com\/script\/helper\/bundle.js\"><\/script> <iframe class=\"even-iframe\" id=\"iFrameResizer0\" scrolling=\"no\" src=\"https:\/\/embed.hifiona.com\/ui\/multi-product\/index.html?partner=loanry-savings-embed&access_token=8cd4ed8e-100a-4353-8752-57dcb4430372_4802f2cd-0b4e-4623-b23a-3fc23a7f178b&company_uuid=1c4e72b3-5950-449c-8ae5-a59c67bbda70&productType=savings&pw_fiona=true&available_products=deposits&tag.subid=4ESRW3\" style=\"width: 100%; border: none;\"><\/iframe> <\/div><\/div><\/div><h2 class=\"wp-block-heading\">Which Card to Use It Responsibly?<\/h2>\n\n\n\n<p>If you decide that realistically you need <em>some<\/em> sort of card in your economic arsenal, the next step is to make sure it\u2019s the <em>right<\/em> card for your situation and style. This is the 21<sup>st<\/sup> century \u2013 you can research and compare just about anything before you commit. Credit cards are certainly no exception.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">When Is A Credit Card Not A Credit Card?<\/h3>\n\n\n\n<p>If you simply don\u2019t think you can control your impulses consistently enough to use a credit card responsibly, it might be better not to have a traditional card. A pre-paid credit card gives you much of the flexibility of the more typical version, but without the ability to go over what you can afford and into a potential spiral of debt.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Tonight\u2019s Special Is Double Bonus Miles<\/h3>\n\n\n\n<p>In fact, there are a wide variety of credit cards and cards that look and work much like credit cards available these days. Not every one of them makes the same amount of sense for everybody, but chances are there are a few which fit your needs and your lifestyle.<\/p>\n\n\n\n<p>If your only concern is having a card available for the occasional special need, your priority might be the lowest possible interest rate and no fees. <\/p>\n\n\n\n<p>However, if you use your card regularly and pay it off every month, on the other hand, you should do your homework ahead of time and figure out which cards offer <a href=\"https:\/\/www.cashry.com\/blog\/11-best-rebate-websites-to-get-cashback-in-your-wallet\/\">discounts or bonuses<\/a> for using them on things you\u2019re already buying or at places you\u2019re already going.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Cash Back Credit Cards That Have Your Back\" width=\"1140\" height=\"641\" src=\"https:\/\/www.youtube.com\/embed\/97_ysYyM1i0?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<p>Like restaurants or radio stations, credit cards can all have a great deal in common while still being nothing like one another in practice. It\u2019s worth taking a few days to kick around your options before you apply for one.<\/p>\n\n\n\n<p>You are looking for the right credit for you so it&#8217;s easier to use it responsibly? We got your back! We partnered with HiFiona to develop this widget which shall help you find the right credit card based on your needs and current situation!<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Using a Credit Card Responsibly Requires Some Financial Literacy <\/h2>\n\n\n\n<p>As Robert Kiyosaki, the writer of <span style=\"text-decoration: underline;\">Rich Dad, Poor Dad<\/span> tends to say it, more often than not the reason you are not using your credit card responsibly is not because of the card.&nbsp;<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><strong>Don&#8217;t cut up your credit cards, the problem is not the cards, it&#8217;s the lack of financial literacy of the person holding the cards. <\/strong><\/p>\n<cite><em>Robert Kiyosaki<\/em><\/cite><\/blockquote>\n\n\n\n<h3 class=\"wp-block-heading\">She Spends\u2026 She Scores!<\/h3>\n\n\n\n<p>Having a card or two with an available balance actually improves your credit score. Now, let me be clear \u2013 I\u2019m not a fan of trying to \u201cgame the system\u201d or make weird choices simply to bump up your score a few points here and there. As a practical matter, however, a better credit score means you pay less for the money you use, whether you\u2019re taking out a mortgage, financing a vehicle, or \u2013 yes \u2013 choosing a credit card.<\/p>\n\n\n\n<p>Part of your credit score is based on how much credit you have available but aren\u2019t using at the moment. Two cards which are maxed out don\u2019t help you at all, and probably hurt your score a bit because they\u2019re part of your total debt and your debt-to-income ratio. Two cards with a combined $10,000 debt limit, on the other hand, and a total balance of, say\u2026 $1,900 you\u2019re paying off in a timely manner, mean you have over $8,000 in available credit you\u2019re not using. That bumps up your credit score.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How Much Would You Like To Pay Today?<\/h3>\n\n\n\n<p>Credit card companies aren\u2019t necessarily \u201cevil,\u201d but they are in business to make money. The longer you\u2019re in debt, the more money they make over time. If you\u2019ve ever had a credit card balance roll over from one month to the next as you pay the suggested minimum payment on your bill or online statement, you\u2019ve probably noticed that you can make those minimum payments month after month and your balance never seems to go down \u2013 even if you\u2019re not actually using the card all that much in the meantime.<\/p>\n\n\n\n<p>Those minimum payments are calculated to ensure that most of what you pay on any given month goes towards the interest on your loan (note: all credit cards are high interest loans). The issuing company wants to charge you enough that they\u2019re making a profit, but they\u2019re not looking to make a small profit quickly so much as a huge profit over a period of years and years. <\/p>\n\n\n\n<p>If you\u2019re living paycheck to paycheck, it\u2019s easy to make just those minimum payments so you can still afford to eat and keep the lights on. If that&#8217;s what you are doing, try another way. Minimum payments mean you\u2019ll be paying on what you owe for years and years \u2013 literally \u2013 with minimal reduction in your actual balance.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Are You In Debt Trouble?<\/h3>\n\n\n\n<p>Sometimes even the best people find themselves unable to keep up with life\u2019s twists and turns. This 2020 year has certainly offered more than enough proof of <em>that<\/em>. If you\u2019re finding yourself unable to get or keep your credit card debt under control, or any other combination of bills and balances, you\u2019re not alone. If you\u2019re worried, that\u2019s good \u2013 it\u2019s worth worrying about. But don\u2019t panic, and don\u2019t despair. You can do this.<\/p>\n\n\n\n<p>We\u2019ve written extensively elsewhere on the Cashry and other Goalry&#8217;s brands blogs about setting and using a practical monthly budget. <em>No matter what your income<\/em>. Take a little time today and read through a few of these articles. They\u2019re not all that long, and we try to keep everything in plain, honest language. You can also find tips on cutting your monthly expenses. For instance by setting up apps on your phone to help you track your own spending. Or other apps to remind you of when bills are due, the power of micro-saving, and all sorts of other tips on squeezing out a few extra dollars each month in ways that make your life <em>better<\/em>, not harder.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Have You Ever Considered Restructuring?<\/h4>\n\n\n\n<p>Some debt can become manageable through restructuring. A debt consolidation loan doesn\u2019t make your debt go away. It\u2019s not a \u201cget out of debt free\u201d card. What it can do is help reorganize that debt so that you can keep up with it each month as you make systemic changes to how you handle your personal or small business finances across the board. A personal loan for debt consolidation can not only lower your total monthly payments. It can also reduce your overall interest rates and help eliminate all those miscellaneous fees and charges that are currently eating up your resources.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Final Thoughts <\/h3>\n\n\n\n<p>We can\u2019t promise that taking more effective control of your finances will always be easy. It won\u2019t always go as quickly as we\u2019d like. But it doesn\u2019t have to be as difficult as it often seems. Plus, you don\u2019t have to figure it all out alone. When you\u2019re ready, and if you need our help, let us know how we can help!<\/p>\n<a class=\"arb-banner\" href=\"https:\/\/mall.goalry.com\/cashry\/?utm_campaign=organic&utm_source=cashry&utm_medium=moneytipscategory&utm_content=banner\"><img decoding=\"async\" class=\"arb-banner-img\" src=\"https:\/\/www.cashry.com\/blog\/wp-content\/uploads\/2022\/02\/cashry-banner.jpg\" alt=\"cashry\"><\/a><!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Nowadays having a credit card is normal, and everybody uses it for so many reasons. However, so many people don&#8217;t use it responsibly, leading to debt and bad credit score. Few days ago, wandering online, I read this quote in an analysis of what some are calling the &#8220;hollow middle&#8221; of the American Dream: Forty [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":20,"featured_media":3331,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_eb_attr":"","footnotes":""},"categories":[6],"tags":[],"class_list":["post-3082","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-tips"],"acf":[],"featured_image_src":"https:\/\/www.cashry.com\/blog\/wp-content\/uploads\/2021\/01\/how-to-use-a-credit-card-responsibly_1.jpg","author_info":{"display_name":"Blaine Koehn","author_link":"https:\/\/www.cashry.com\/blog\/author\/blaine-koehn\/"},"_links":{"self":[{"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/posts\/3082","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/comments?post=3082"}],"version-history":[{"count":5,"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/posts\/3082\/revisions"}],"predecessor-version":[{"id":5612,"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/posts\/3082\/revisions\/5612"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/media\/3331"}],"wp:attachment":[{"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/media?parent=3082"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/categories?post=3082"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/tags?post=3082"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}