"With great power, comes great responsibility". When it comes to credit cards no statement rings more true! Using a credit card responsibly is a must, and is a topic we could all use a little help on.

The Why

In very basic terms, using "credit" means being able to purchase things when you don't have enough cash to cover the purchase, or don't want to pay in full at that given time. The creditor will lend you the money allowing you to make your purchase, but you will be responsible for paying them back the full amount with interest. Building up credit is essential for ensuring your ability to purchase bigger things like a house or a car. Having and maintaining good credit can open so many doors in life, but having bad credit will quickly slam all of those doors shut, and some are very hard doors to re-open.

The Danger

Credit Cards can be extremely dangerous if not handled responsibly. Many people use more credit than they can actually afford to pay back. People can fall into this trap due to many different circumstances. Some may have been laid off so they then feel like they have to rely on credit to get their bills paid. Others are burdened by large medical bills that they feel they can't pay without the help of credit. When credit is used like this it can not only put you in debt, but also put you at risk of not being able to obtain future credit.

Responsibility

The single biggest thing you can do with your card to build your credit score and protect your finances is to pay off what you owe on time. Making the minimum payments on your balance is a bad habit to get into. The best way to use your credit and keep your score high is to be sure and pay off your entire balance at the end of every month. This also helps you eliminate paying interest on the balance if it were to carry over month to month. Another thing that you can do is not borrow too much at one time. All of your available credit is commonly referred to as your revolving credit. It is recommended to keep your revolving credit usage below 30%. This shows creditors you are not maxing out your cards, and are able to manage them responsibly. With that in mind, don’t be afraid to use your card when you need to. It's a good practice to use your card when you NEED to, not when you WANT to. Sure, that trip to the mall might be nice, but when your car breaks down and you need a tow, it might prevent you from having the funds to cover it in your time of need. The most important thing to remember is to not only use your card, but make sure that you are using it responsibly.

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