How to Use Credit Cards Before Bankruptcy

Credit cards can lead many people to bankruptcy when they are misused or misunderstood. While credit cards can be dangerous, they don't have to be. If you can act responsibly, you can use your credit cards and avoid bankruptcy.

Things You'll Need

• Credit card

Instructions

1. Understand how credit cards work. Credit cards are essentially loans from the card issuers. They can be short-term, no-interest loans, if you pay them in full during the grace period or they can be long-term, high-interest loans if you only pay a portion of the bill each month. Most people enjoy the flexibility at their own expense.

2. Use one credit card for regular purchases. This will make your money easier to manage and reduce multiple late-payment fees from different cards. Using one credit card can actually help you understand where all of your money is spent.

3. Review your credit card balance frequently. You can call the credit card company or go online to see how much you have spent in a period. This will help you know if you are staying in your allowed budget and help you to see how quickly money is spent.

4. Pay off your balance before your grace period is up. You will need to check your card issuer to find out how long you have. Don't assume it's a month. Some cards have a grace period as short as 20 days, and some cards have no grace period at all. If you carry a balance, most cards give you no grace period at all while you have a balance.

References

• How to Use a Credit Card Responsibly