CREDIT CARD TIPS FOR SMART USERS
When put to good use, a credit card can be a tool that can help you out in financial difficulty. If you are the type that makes the consistent prompt payment, then you would have a good credit rating and if you don’t have a good credit rating, your prompt payments over time will improve your rating. There are even some cards that offer a 0% interest rate for a short time on balances that you transfer from other credit cards, and there are some that offer rewards for purchases.
Having a credit card is a good thing, but it can be an issue if your spending gets too much. This can result in accumulated interest and monthly payments that can affect your finances negatively. Here are some credit card tips that can help you manage your finances well;
- Try to pay off your balance every month
Try as much as possible to avoid paying interest on purchases you make with your credit card by paying the full amount that the purchase costs. Be disciplined enough to ensure you are not tempted to spend more than you can pay in a month. All these will help you avoid paying charges in the form of interest and then you will be able to enjoy the benefits that come with using a credit card.
- Use the card for what you need and not what you want
There is a big difference between needs and wants. You need to be able to distinguish between the two. Needs are essential items that you cannot do without but spend on them, while wants are things that you can do without. Using your card for buying what you want can get you in debt. Hence, you have to cultivate the attitude of using your card carefully.
Credit cards can be used in emergency circumstances, such as paying for a utility bill that is due before your next payday. See the credit card as a loan and whatever you take out must be paid back as soon as can so that you can avoid or decrease charges as a result of interest.
- Do not miss payment dates
Make sure you pay your bill promptly, missing payments can affect your credit score adversely, you can incur penalties or charges due to late payment. So, always try as much as possible not to miss payment dates. You can authorize automatic payment on your account as well in case you are the type that can forget to make payments when it is due.
- Use a rewards card
If you make payments for all your purchases with a credit card, then you need to get a card that offers rewards for your purchases. This will help you to avoid interest to some extent, and you can enjoy retail points, cash, or airline miles among others.
- Use the credit card as a budgeting tool
If you are sure you can use a credit card judiciously and you can pay off the balance monthly, then you can use your credit card as a budgeting tool. If you use your credit card for all your purchases, then you will be able to know how much you have spent at the end of the month. If you are going to do this, make sure you are card is not charged with more than what you have in your bank account.
- Stay below 30% of your total credit limit
Work towards ensuring that your credit utilization ratio doesn’t go beyond 30%. Your credit utilization ratio is regarded as the percentage of the total credit you have available. For instance, if your limit is $2,000 you should keep your balance under $600. Note that the ratio is inclusive of the sum of all your credit cards.
The bottom line is that you should be responsible for your spending. Do not exceed the credit limit on your card and do not allow your credit utilization to go beyond 30%.
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