Oakland Credit Card : Spend What You Can Afford

By: EconomyWatch Content Team   Date: 28 January 2010

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You are out at a store and you see something you would like to buy. In fact your eyes grow wide at the prospect and you can feel your heart racing with excitement. Before you pull out your Oakland credit card from your wallet ask yourself if you can really afford this purchase. Be completely honest with yourself. Your answer will not only have an effect on the current state of your finances but also on your credit score.

In order to build a positive credit history and to stay as far away from debt as possible only charge on your credit card the amount you can realistically afford to repay. This is one of the most basic principles of credit. How much this amount is depends upon different people. It has to do with an individual’s income, the credit limit on their Oakland credit card, their expenses and finally, the balances on other credit cards.

Always bear in mind every time you think about using your credit card that you should stay within your means. The amount of money you can afford to charge is mainly dependent upon what is known as your discretionary income. This is how much money you are left with after you pay all of your expenses and all of your taxes.

Let us take a look at how this works. Most people work for employers who take taxes from their gross income so that they never even see the money. What they are left with is their net income. Some people refer to it as disposable income. From this income you buy food and pay all of your bills. What is then left over is your spending money or what some people fondly like to call their mad money. To get as technical as possible, this is your discretionary income. It is from this money that you pay off your Oakland credit card balance.

Your credit score is best when your credit card bills get paid every month on time without fail. If your discretionary income is $1,000 per month then you cannot afford to charge any more than that without running into a financial problem.

You need to think of your credit limit as well. Just because you were granted a high limit does not mean that you should take advantage of that. To keep a good credit score, never go over your limit. In fact you should stay well below the limit you were given. A practice worth getting into is to always make sure your Oakland credit card balance is at least 30 percent below your credit limit. In other words with a $1,000 limit you should not charge anymore than $300.


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