There is nothing quite like the thrill of seeing your name embossed on a shiny new credit card for the very first time. You feel empowered. Like a superhero. “Plastic Man” swooping in and saving his nearest and dearest from ominous restaurant bills with the mere swipe of his powerful card.
You may feel infallible now, Plastic Man, but with great financial power comes great responsibility.
Able to erase bar tabs with a single swipe. It’s Plastic Man.
So before you splash out on a wardrobe of spandex and capes, there are a few things you should know about managing credit–and super powers–responsibly.
Learn How to Spot a “Need”
The most important lesson to master when it comes to managing a credit responsibly is the ability to discern what is a need and what is a mere want. Yes, wanting something “more than anything in the world” does not qualify it as a “need.” For example, you need sunglasses to protect your vision, but you do not “need” expensive polarized Oakley’s.
When it comes to making purchases, remember to ask yourself if this is something you really need or if you are merely trying to satisfy a fleeting want.
Don’t Charge More Than You Can Pay
Pay your credit card balances in full before the due date every month. Paying interest and late-payment fees are a waste of hard-earned cash. As USA Today‘s “5 Tips for Responsible Credit Card Use” warns, “if you can’t afford to pay it off by the end of the month, then you simply can’t afford it.” So, before dazzling a damsel in distress with your card-swiping prowess, make sure that you have enough money to cover the bill.
Several Cards is not Better than One
Surely, Plastic Man would benefit from having multiple weapons–otherwise known as credit cards–at his disposal, right? Wrong. Having multiple cards can not only lead to ruinous financial temptations, but it can also drastically decrease your credit score. Forbes‘ “Using Credit Wisely” recommends, instead, that you limit yourself to one major credit card that has a manageable limit.
Beware of the “Cash Advance”
Using your credit card to get your hands on paper money is a bad idea as cash advances, typically, accrue interest at a higher rate than regular purchases. If you can’t pay the balance in full at the end of the month, you will be dinged with a hefty interest charge or worse. According to “5 Reasons Why a Personal Loan is Better Than the Alternative,” the monthly minimum payment may increase depending on the balance on your card and, because it’s so easy to withdraw money until you’ve reached your credit limit, you could find yourself deep in a vicious cycle of debt. Bye-bye super powers.
Watch Out for “Kryptonite”
As a credit card-wielding superhero, you will encounter foes who wish to strip you of your weapon. Yes, they will go to great lengths to secure your credit card information in order to wield your credit card, themselves.
Safeguard your personal information. Shred old bills and credit card statements, be very cautious when making online purchases, and never ever provide any personal data over the phone. And, if your priceless plastic does go missing, report it to your credit card company pronto.
Plastic Man, you now have the wisdom needed to cope with the great power with which you have been entrusted. So, get out there and fight for truth, justice, and the American way. But, always swipe responsibly.
If you’d like to learn more about handling your financial super powers with savvy, you will want to check out “On Becoming Financially Responsible.”
