Credit is a financial tool that can offer convenience and financial flexibility. But, like any tool, it works best when managed responsibly and with caution. Control your credit, don’t let it control you.
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How do I manage my credit responsibly?
A good first step to manage your credit responsibly is to manage your money responsibly. Here are some practical tips you can follow:
- Create a budget to manage your expenses-and stick to it. Refer to the FSA Moneymadeclear website for useful tools to help with budgeting
- Be realistic with your spending
- Keep track of where you spend your money - saving copies of your receipts will help
- Save up over time for large purchases instead of buying them on credit
- Keep credit card balances low - even better, try to pay them off every month
How do I borrow responsibly?
Borrowing responsibly means paying your bills on time and not taking on more debt than you can handle. Here are a few practical tips:
- Use your credit for planned purchases that fit into your monthly budget and avoid making impulse buys for bargain-priced items.
- It is not wise to finance purchases longer than the lifespan of the product you are buying. Financing a car over a long period is fine but everyday purchases should only be financed for short periods.
- Avoid approaching or reaching your credit limit. Not only will you save on monthly finance charges, youíll also be keeping credit available for when you need it most.
How do I know if my borrowing is getting out of hand?
Here are some warning signs. If any of these apply to you it may be time to take a fresh look at your financial situation or seek professional financial assistance.
- You’re consistently paying your bills late and making only the minimum payment each month.
- You find yourself surprised by the number of new purchases on your statement each month.
- You’ve reached or exceeded the credit limit on one or more of your accounts.
- You need to take on overtime work, or even a second job, just to make your monthly debt payments.