10 Tips for credit card use

Introduction

Credit cards act as cash advance to the user with the promise of paying back at a future agreed date. Other people use credit cards to avoid carrying large amounts of cash or even for emergencies. Like all credit, interest is earned on money borrowed. Below are some tips on how you can use your credit cards correctly without getting caught in bad credit.

Step 1

1.     Charge only amounts you can payback in full. In cases of emergencies, it is allowed to go over the limit but sit down with your creditor to work out a payment plan to avoid strain. Otherwise, control impulse buying at all costs by sticking to your budget and maybe allocating that item to the next budget. This calls for discipline but it will all be worthwhile in the end.

2.     Pay back your credit card balance in full each payment due date. This way you avoid accumulating interest. Most credit card holders pay only the minimum on their bills and this way, it ends up being a very expensive form of credit.

3.      Ensure your payment gets there on time as; paying on time greatly improves your credit score. And a higher credit score is a pass for better rates with lenders.

Step 2

1.      Choose credit cards with low interest rates only. Though they might have less attractive offers with them, understanding that this is a lucrative business to some, will help you clearly see the catch; and it always ends with you spending more.

2.      Collapse all your credit cards into one or at most two. This will help you to avoid your spending getting out of control. Several credit cards can get your budgeting very difficult as it becomes harder to track.

3.      Financial experts advise consumers to leave at least 50% of their credit free and unused.

4.      Choose credit cards with sufficient grace period. To buy as much time as you can before incurring the interest rate

Step 3

1.       Review your billing statement each month. The sooner you address any abnormalities the earlier they can be dealt with and save you money and time.

2.      Zealously guard against credit fraud. An example would be internet scams from people or companies trying to get you to disclose your personal information to them by sending what look like legitimate emails from your creditor or bank. It would be very painful to lose money you have nothing to show for. Report loss immediately so that precautionary measures are taken.

3.      If for any reason you are not able to make your monthly payment, contact your creditor in advance and let them know you are not able to make your payment on time. They are able to advise you accordingly and help you review your payment plan saving you some money.

 

Tips

Credit cards are not an excuse to do away with budgeting. Handling credit cards calls for a lot of alertness and discipline as the spirit of procrastination can fast catch up with you; always thinking that’s tomorrow’s problem. It is  also important to teach kids how to handle credit cards sparingly and promote the saving culture in them.

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