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How I Deal With Credit Cards

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I’ve had a credit card for 8 years now and haven’t built up any debt. I’m not one of those people who point hack using their credit cards to incur benefits and free travel, although that’s something I’m certainly interested in. My credit card use is fairly simple and I think that’s part of the reason I’ve had so little problems with it.

I use my credit card only for online purchases, such as:
Online groceries
Ordering clothes/shoes online (these things are much, much cheaper overseas)
Paying bills such as Internet and power
Topping up my phone
Booking things online, such as movie tickets
My gym membership

This means that my credit card purchases are limited to a few purchases a month, making it easy to keep tabs on them. My credit card also has a tiny, tiny limit of $500. I don’t make credit based purchases unless it’s an emergency (and at the moment I’m trying to build up an emergency fund). Whenever I log into my Internet banking I make sure my credit card is paid off. Whenever I make an online purchase, i.e. a payment from my credit card that is not automatic, I transfer the funds.

Many people have problems with credit card spending because they spend money they don’t have.

When I first moved out of home I moved in with my boyfriend at the time. We were both 18, fresh-eyed and heading off to the ‘adult’ world of college and credit cards. When we signed up for our student banking accounts, we were both offered credit cards and we both got one. Mine had a $500 limit, his had a $10,000 limit. Needless to say, within a few months his credit card was maxed out. We were both studying full-time and I estimate his income would have been in the 30-40,000 per year category.

$10,000 is a lot of money, especially when you’re earning at that rate. Throughout the course of our relationship, he was constantly making payments and sometimes would get part of the debt knocked down, but then it would creep back up with the next expensive thing he bought. I, on the other hand, ensured that I always had more money in my account than debt on my credit card.

I treat my credit card as a way to spend money (online) that I already have.

I’ve never bought anything on store credit or hire purchase.

I firmly believe if you can’t afford to pay for it now, you shouldn’t have it.

How do you use your credit cards? Do you collect points on them? Do you rack up debt or pay it all back each month? Let me know in the comments below. 

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