However, it can also be an instrument of financial ruin if not managed effectively. This is often seen with credit cards for college students. Credit card interest is higher than on most other forms of debt.  There are also severe penalty fees and major implications for your credit record if you show lenders that you aren’t capable of reliably paying off your credit card.

So, here are a few tips for keeping your credit card under control:

1) A Credit Card is Not a Long Term Loan

Unfortunately, many people take the ‘I’ll pay it back later’ approach to credit card charges, and ring up charges that they don’t realize are going to take them a year or two to pay off.  This puts a lot of strain on your finances, especially if you don’t make a lot of money.  Always work out how long it’ll take you to pay something off before you charge it.

2) A Credit Card is Not For Daily Expenses

Groceries and bills should not go on your credit card.  The only exception is if your credit card offers a loyalty program that gives you good benefits from spending on your card.  In that case, it is important to pay off your balance in full every month so that you get the rewards without paying any interest.

3) Leave Your Limit Where it Is – Or Lower It

Do you really need all that credit? If your credit card is maxed and you’re struggling to it off, then that’s usually a sign that you need to reign it in.  Work on paying off a portion of it, then lower your limit to the remaining balance.  Repeat this a few times until you can manage the payments more easily.

As for asking the bank to raise your limit, bear this in mind: every time you apply for credit, your credit score goes down, regardless of whether you are approved or even use the loan. Apply for extra credit as seldom as possible.

4) If You’re Going to Miss a Payment, Tell Your Bank

In fact, tell your parents. As embarrassing as it is now to tell them you can’t afford this month’s credit card bill, it’s much more disappointing to be turned down for a home loan. Notify your bank immediately – if it’s the first or second time they’ll probably just put a note on your account and your credit won’t suffer.  Ask your parents for a personal loan just to cover the interest for the month – it’ll save you piles of hassles down the line.