# 1 Rule for Wise Credit Card Use

When life is busy, following this simple rule will give you financial peace of mind.

September poses a threat to our credit cards. The month is filled with so much to do and buy. Back to school clothes, supplies, followed by registration fees and equipment for sports and other extracurricular activities. Our time and energy is maxed, so we spend more on fast food or ordering in while rushing here and there.  All of this rush can be overwhelming and when we are overwhelmed, we tend to take the easiest route…. buy now; pay later. Credit is so easy to use; as fast and simple as a “tap”! Balances on cards and lines of credit can rise staggeringly high during back to school shopping days and the added expenses that follow. If your life is a rush, and you don’t have time for a lot of planning, consider what I believe is the single most important rule that can best guide our credit card use.

#1 Rule is, “Don’t spend more than you’ve saved”

That’s it.

Simple.

Why does this rule work? A credit card is just a tool. Like a blender or a hammer. It helps us get a task done, and it makes some tasks easier and more convenient. But if not used properly, it can cause an unpleasant mess or even pose a danger to our well-being. Tools need to be cared for, used according to instructions, maintained and safely stored. All of these rules apply to a credit card.  Pay on time, don’t go over the limit, understand the fine print, and keep your card safe from theft. Balances we can’t pay in full, grow with interest and become stressful as we make payments that seem to get us nowhere and make us wish that our paycheck was ours to spend again, instead of continually paying for things we purchased last month, last year or even several years ago.

A credit card is not a savings account. It is not an emergency fund. When used properly, a credit card will be a convenience when we need it to help us get the best price, great seats, rewards or discounts, while maintaining our good credit rating and score to help us get the best possible interest rate when we need to apply for a vehicle loan or mortgage. The very best way to maintain your credit card is to pay it off every month. The easiest way to do that is to pay into your savings monthly, and have enough money in your savings account to pay for the purchase in full, on or before the due date. That means a low credit card limit; lower than the balance in your savings account. Simple!

September is busy and exciting and you will likely put a dent in your savings, but with savings to pay for your purchases, the stress of debt will not follow you into October, and the money will be replenished if you pay into your savings account every pay.

But we know that sometimes, life is not simple. Occasionally, our plans and intentions do not roll out the way we think things will. Sometimes, debt can get out of hand. When this happens, don’t let it go on too long. Growing debt is not good for our well-being, for our relationships, for our mental stress or for our credit scores. If your credit balance has surpassed your savings balance, stop the rush. Call CCRC’s Credit Counselling Service to speak with a credit counselor who can help you explore your options and develop a plan to pay down debt, before stress takes over.

By Nancy Jackson, AFCC – Credit Counselling Services of Peterborough