USING CREDIT WISELY
It is sometimes easy to forget that you have to pay for what you buy. Here are some guidelines for keeping control of your financial affairs and making credit work for you, not against you.
1. Make a budget for yourself and stick to it. Make sure that you know what is coming in and what is going out. That way you will avoid nasty surprises.
2. Avoid impulse buying. If you had to pay in cash, would you be making this purchase?
3. Comparison shop as a matter of habit. Never buy anything – and that includes any form of credit – without comparing costs and value.
4. Always read and understand application forms before you sign them.
5. Be careful of co-signing a loan or guaranteeing a loan on behalf of others. Remember that you could end up paying off the loan if the borrower cannot handle it. Ask the same questions of the borrower that the lender will. Know the risks involved so that you can make a sensible decision.
6. Be knowledgeable about the cost of credit. Are you using the right type for your purpose? Are you using a more expensive form of credit than necessary?
7. Be sensible about the number of credit cards you use. How many do you really need? Are you using them simply because you have them?
8. Keep track of all your credit purchases. Save the receipts for checking against the monthly statements and for keeping a running total of your obligations. One way you could do this is to get an extra cheque register (the part of the cheque book on which you keep track of deposits and withdrawals). You could use the “cheques” column for noting credit purchases and the “deposits” column for noting credit payments. The “balance” column could be used for noting how much you owe in total.
9. Remember, whether you use cash, a cheque, a card or a loan to pay for your purchases, to check out the reputation of the merchant, the store’s return policies, the quality of the goods and the product warranty. Using credit to pay for something does not absolve you of your consumer responsibilities.
Credit can be good or bad. It’s all about how you handle it. Before you decide on credit, carefully consider all of the factors and weigh them against your personal needs and values.