I’ve always been terrified of credit cards. I grew up hearing awful stories about how they can destroy people and I thought they were the devil. I used to pride myself on avoiding them – I was the Jason Bourne of credit.
But that all blew up in my face when I started to think about getting a mortgage and have an awful credit rating because I had no credit. I got a credit card, well two actually and started to use them strategically and carefully. If you know what you’re doing, having a credit card is more than useful – go into it needing the money or ignorantly, you’re going to get stung.
Here are the 10 credit card commandments (I will hear no jip about the poorly executed old-timey language thank you very much!):
Thou shall pay off your balance every month
The game here is to avoid paying interest on your credit card purchases (because the APR’s can be eye-wateringly high). To do this, you need to pay off the full balance every month.
Don’t touch one if you aren’t in the position to pay off in full, and if you can – you’ll enjoy all the benefits a credit card can bring without having to deal with any hefty interest charges.
Thou shalt not use the credit card for frivolous things
Credit cards should be used with caution. You need to think carefully about what you’re going to spend on the credit card in a month and never just stick fun, last minute items on it.
Plan it out. So with mine, I only used it for my monthly food shop for while. I didn’t carry it with me and only pulled it out once a month for that purpose. You can’t start playing that game where you think, ‘Sod it, I’ll just stick it on my credit card’, you could lose sight of what you’re actually spending.
Thou shall make the most of the rewards
If you’re using your credit card, you should use a card that gives you brilliant rewards. If you’re paying it off fully and avoiding interest, while bagging yourself rewards such as cash, vouchers, airline miles – is really a no-brainer.
Thou shall not apply for a card you have no chance of being accepted for
Look, I want you to have all the things your heart could possibly want – but banks care somewhat less. You need to apply for cards that match your credit rating.
The reality is , the best deals are reserved for people with amazing credit scores and if you get turned down for a card, it will impact your credit rating.
When I was ‘playing the credit card game’ I started out with a ‘bad credit’ card and worked my way up. A good way to see where you stand and what you could get is with MoneySavingExpert’s credit card Eligibility Calculator. You put in your details and it does a soft search on you (which will not affect your credit rating) and tell you what you could apply for, and the likelihood of you being accepted.
Thou shall set up a direct debit
Yeah yeah, I know you have it covered – but trust me, a direct debit is a lot safer. If you miss a payment, you’re going to face charges and it will hurt your credit rating.
So just avoid all this and set up direct debit to ay off at least the minimum amount each month to cover you.
Thou shall log in at least once a week
Don’t be a stranger and log into your credit card account at least once a week to make sure everything is ok and you are on track. If you’re pushing the limit of what you can afford to pay back that month, you’ll know before it goes very wrong.
Any I missed out? Let me know in the comments!