Having a credit card (or cards) may not necessarily mean you have bad debt, I’m sure most adults today carry one, everywhere. However, when used without planning or management, having just one card can spell big financial trouble in the long run.

So here are the top 5 TIPS on how you can use a credit card to your fullest advantage to make it work for you.

1. Do not rely on yourself: organize direct debit agreements

Once you receive the “APPROVED” notification, be sure to set up an account where you can have the Closing Balance debited directly from this account at the end of each month (or billing month). This account can be just a daily/most basic account (preferably one that doesn’t cost a monthly fee) where you can budget your credit card expenses. This way, you’ll never miss any payment due dates and never fall into that trap of the irrevocable cycle of credit card interest payments.

For example, when you first sign up for a credit card, most banks offer an “Interest Free Period of X days (eg 55 days)”. This means you can spend up to your limit (for example, $1,000) through the 55th day. On the 56th day, you are expected to make the closing balance for that particular period. If you don’t, you’ll be charged the purchase interest rate, which can range from 14% to 25% per year. Now this loads and accumulates from the 56th day until you can pay it down to $0 balance due!

So, imagine this chaos for a minute; On that card, you have a balance due of $999. You are trying to pay $100 each week. But you have an ongoing monthly contract tied to this credit card each month for your phone, internet, gas; however, that seemingly not-so-incredible piece of plastic is racking up 20% interest on your balance every day… Confused yet? Well that’s how they catch you! Before you know it, you are trapped, simply trapped in this endless money draining game.

The only logical way to save yourself from this nasty situation is to literally destroy the card. So make sure you set up that Direct Debit. Soon! Because you just can’t trust yourself.

Guess what, it will probably force you to make sure you stay on top of your money, so you won’t keep spending on that credit card unless you can afford the payments.

2. Keep your limits low

Just because you can get a credit card with a higher limit doesn’t mean you should accept it. Sometimes you can get carried away knowing how much you have on the scale and walk into that same trap again. Don’t get carried away by that bad habit.

Basically, the way it works is, once the bank notices how good they’ve been with managing your money, you know, with all that direct debit set up so you pay everything on time, on budget, they tend to send a “Good news!” notification: to congratulate you on the offer to be able to ‘upgrade’ to a higher limit.

Note to self: this isn’t really a “reward”, it’s just a push to say “Well done for being a responsible adult. We trust you can manage your money, so here’s more money to spend, but remember you STILL have! give us the money back!” Get it?

3. Review shopping clothes

Now the fun part! Think about your clothes shopping, do you go to specific grocery stores, malls, movie theaters, or even specific gas stations? Check to see if they have Points Rewards affiliates with the credit card company or vice versa. For example, most credit card companies (banks) have affiliate programs with airlines, and if you use that card at certain fuel stations/grocery stores, the points are doubled! So if you’re like us, the jet set, or love free or even half-price vacations; make sure you stick to that rewards program!

It really is a no-brainer: you should spend on those groceries every week anyway, you might as well earn some travel points with them!

4. Do not spend it on decorations

There should be a separate account for this.

If you are not familiar with Robert Kiyosaki and his famous game, the Cashflow Game, you are probably not familiar with the term ‘doodad’. Doodads in this case means gizmos/gadgets that are nice to have but don’t necessarily need.

Don’t get me wrong, of course you can have your ‘nice’ things, like the home theater of your dreams or that plush couch you’ve been staring at since your cat invaded your favorite chair. Goal! If you handle this correctly, you should have a “reward/gift” savings account set up for you, your partner, and/or your cat, so you don’t have to dip into credit card debt.

Just don’t get involved in bad debt if you don’t have to.

5. Create, Maintain, Destroy

Who doesn’t love having a credit card? I have 2, I think my father has about ten (10) times more, simply because he loves to accumulate points. Oh, also where he lives (Indonesia), you get discounted meals (50% off each time) if you use a specific credit card at that restaurant. #victorious

But like I said before, once you get into that ‘endless money drain’ game (even if it’s an accidental move), you have to let it go.

If you can’t keep it, for some reason you can’t make payments on those interest payments, then you should stop using the card. He calls all the suppliers to cancel the invoices linked to him and destroys the card, while trying to pay it to zero.

Once you have paid everything, you can reapply for another card in the future. Just so you can start from scratch! Hurrah!