How To Manage Money Masterfully And Keep Credit Clean

use credit card wisely maintain good financial health

When you are struggling to maintain a good credit history or trying to rebuild it after a drop, it is very important to use your credit wisely. Using your credit in the right way help to build and maintain a good credit score. However, credit cards don’t come with personal advice on how to use it responsibly. Those who have a credit crash may have already learned it the very hard way about the adverse impacts of credit misuse. It is never too late for them to start over and repair it, and for fresh credit card users, it is wise to be knowledgeable about it at the first point. 

Understanding A Credit Card 

A credit card is primarily a contract between the users and the issuer of the credit. You hold and card and may use the funds offered by the institution to its maximum limit to pay off a merchant or withdraw cash advanced. This advance fund release is done on the basis of an assumption that you will repay the lender within a specific time. 

The institution charges some service fee for this cash advance and also charges interest on it unless the owed credit is not paid off in full by the specified date. Credit cards are an example of a revolving economic system, in which the cardholder borrows the amount, but need not have to pay off the full amount at each period and may also enjoy interest-free periods based on the terms and conditions of various credit services. 

Getting Started With A Credit Card 

If you are new to spending on your first credit card, then start slowly and be informative. Don’t max out to your credit limit from the very next day on receiving the card. Instead, initially charge small on the credit card and then pay balances in full. The only goal of credit card usage is not to buy things with cash advance, but to build a strong credit history and practice admirable credit habits. 

The ideal way to practice credit card usage is to leverage it for small monthly subscriptions effectively or to pay off recurring bill, for example, a bill of $30 or less. Initially, let it be the only charge on your credit card for a few months. This will get you turned with the habit of staying within the set credit limit and manage money matters masterfully by paying off your credits fully as per terms. This pattern will have a positive impact on your credit score. 

Make It Bigger Once Learned 

Once if you have positively nurtured a habit of staying within limits and paying off fully, you are better trained on using your credit card. At this point, you can try using your credit to make slightly bigger purchases. However, try to keep it within 30% of the credit limit. Which means your balance should always be kept $30 or above if your limit is $100. 

While purchasing with credit card, always try to keep the payment aside so that you won’t spend it again before the bills come. With this style, you already have the payment ready to instantly pay it off as soon as the credit bill turns up. You also have options to make the payment immediately after the purchase even before the bill arrives. 

After about six months of using your new credit card in the right manner, you may get your credit limit increased by the provider, which will let you charge on your card as well as enjoy a higher credit limit and some special loyalty offers too. However, at any point, stay within the 30% limit of the maximum as you practiced at the first point. On the other hand, if you use your card irresponsibly, the creditors may soon cut down your limit, and you also may end up in a financial breakdown. 

The Key Components To Consider While Using Credit Cards 

It is essential to be familiar with some terms while dealing with credit cards. 

 Annual Fee 

Does one need to know how much you should pay as the service charges on owning the credit card? If you are planning to have a credit card only to use in case of emergencies, then choose a credit card with a minimal annual fee. It is also worth for the cardholders to hold cards which offer a great value on the fee with credit card reward programs, built-in insurance schemes, and offers, etc. Consider the collective value of your credit card benefits supersedes the annual fee to make it cost effective. 

• Rate Of Interest 

Before spending on credit cards, always calculate the actual cost of the funds and also the payout you bound to. For any credit cards, there may be a particular escalating interest on not paying back on time, so you should be aware of these slabs to understand the cost involved regarding regular term payments and penalties on delayed payments, etc. 

 Credit Limit 

This is a key term to be considered. Credit limit specifies how much one can borrow regarding credit for purchases and cash advance. The credit limit may vary for different type of users based on different factors like your income, living expenses, repayment capacity, credit score, etc. 

 Payment Terms 

Check for the following terms to have a clear understanding: 

- How much time you have before making repayments? 
- Does the card offer an interest-free period to pay off the balances without any additional cost? 

To help the users to manage the cash flow in a better manner, many credit cards have different payment terms to match to the need of various types of individual users and businessmen, etc. 

Along with convenience and purchasing power, credit cards may also be useful to plan and manage your money and enjoy some additional rewards if used responsibly. To maximize the benefits of using credit cards, avoid spending more than what you rightly need. It is also essential to establish a finely balanced budget with the help of a budget planner. If you run a business or running short of decent credit score, this budgeting needed to be done with the assistance of a personal financial analyst who can guide you according to the situational needs.


I hope you enjoyed this blog post about why money matters and how to use credit cards wisely for maintaining good financial health.

Interested in more articles about personal financial management?

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