6 smart ways to use your credit card
It goes without saying that credit cards are a double-edged sword. The convenience a credit card offers can lead to impulsive spending, which in turn results in escalating debts. On the other hand, using credit cards wisely can deliver numerous benefits. The key is to make informed choices on using your credit cards to your advantage, and not be the victim of reckless spending.
Here are 6 proven smart credit card strategies:
1. Borrow cheaply
Take advantage of introductory low-rate offers, such as 0% interest for six months or 0% financing for one full year, with a major purchase. Smart consumers take advantage of these offers for many reasons – to consolidate debt, pay tertiary education fees or to fund home renovation projects.
2. Accumulate rewards
Most credit cards offer subscribers rewards using the accumulated points approach. If you use your reward credit card to purchase items that you need, you can earn a wide selection of rewards that suit all tastes such as travel rewards, shopping and restaurant vouchers, and free movie passes. However, keep an eye out for “strings attached” in the form of limited travel dates, limits on the amounts you can earn, and minimum purchase requirements.
3. Only spend available money
We should always be reminded that credit cards do not represent extra cash. In fact, they should be deemed as substitutes for cash. Credit cards represent convenience without having to carry cash around, enabling us to purchase necessary items at just a swipe of the plastic. Ensure that you already have money in your account to pay off your purchase when your monthly statement arrives in your mail. Missing the payment deadline will cost you more money as you have to pay the late payment fee. Furthermore, carrying a balance on your account will result in your having to pay interest on it.
4. Keep an eye on fees
While the a rewards credit card may be worth the annual fee, most cards with yearly fees aren’t worth it at all. Be aware of other fees charged on your credit card, too, such as foreign transaction fees, late payment and over the limit fees.
5. Set up automatic payments
If you have the habit of not paying off your balance on time, it is wise to sign up for automatic payments through your bank. This method also works well with those who are managing various kinds of loans, such as car loans and mortgages.
6. Avoid cash withdrawals
Some banks charge for cash withdrawals via the automatic teller machine (ATM). If you need to make a withdrawal, take out the sum of cash that you have budgeted for the whole month in a once-per-month withdrawal. This way, you save the unnecessary multiple fees that will be charged to you each time you use the ATM.
Credit cards are a boon if used responsibly on selected purchases. The significant factor to note is to ensure that you maintain your credit rating by paying your balance on time and settling the full sum of the amount you owe. You’d be better off not using the credit card if you don’t have readily available cash in your account to pay off your bill. Always stick to cash for ordinary day-to-day items like toiletries, groceries, clothes and restaurant food. The bottom line is to ensure that you fully use your card to your advantage by avoiding credit card traps like making a late payment and maxing out your credit card.
Image by Images_of_Money
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