A lot of us enjoy the many benefits offered by credit cards from time to time. Credit cards can be a handy way to manage a continuous cash flow considering we use the card wisely and have good financial habits.
However, one can get trapped into hard-to-manage credit card debt if you don’t know how to get the most out of it.
Here is all you need to know to manage your credit card better –
Understand Credit Cards: Your credit card represents a contract between you and your financial institution. The cardholder is supposed to use the card and financial institution’s fund to pay at a POS or withdraw cash, depending upon their needs, based on the assumption that they will pay back the lender by a set time.
In order to provide this convenience, the institution charges interest on the used funds, provided the borrower pays the said amount in full before or by the due date.
Track your spending: It is very easy to rake up debt on your credit card more than what you can afford to pay, and this is why, it is important to stay in control.
Therefore, always make sure to keep track of your spending by checking your credit card statement regularly and by paying off in the middle of the month if you know that there are more expenses lined up.
Don’t carry a balance: This is the best way to optimise your credit card. As long as you pay off your due amount before or on the due date, you will not pay any amount in interest. So, one handy tip that you can use to avoid carrying a balance is to set up alerts to credit card due amount.
Log in to your account information regularly to make sure you are spending more than you can afford to repay. Also, you can set up an automatic amount debit from your savings account to ensure you pay off the total amount due off your credit card by the due date.
Clean Card: If you use more than one credit card, you need to maximise their benefits and use efficiently. You can consider paying off the one with higher interest rate or the one with the larger account balance.
Another handy tip, in this case, is not to make any non-essential purchases while still in debt. Also, if you have more than one credit card, having one clean card makes sense. If you are not carrying any balance on this card and making sure you pay off the entire amount by the due date, then you can keep using it without worrying about incurring interest amount. This way you can manage your regular expenses while at the same time allowing yourself time to pay off the ones with larger debts or higher interest rate.
Opt for a sensible credit limit: Your credit card limit should always be the amount you can afford to repay, and the one that wouldn’t tempt you to spend more than you should. If you feel you would be tempted to spend more than you can, then you can ask your financial institution to reduce your credit limit.
Credit cards provide a great way to manage your monthly expenses along with other bonus options such as reward programs, fraud and theft protection, travel insurance, etc. Understand the many benefits offered by your financial institution before buying a credit card.
Many institutions provide credit cards with dining and travel privileges where the cardholder can enjoy an extravagant reward point system.
So, use your credit card wisely to enjoy the maximum benefits.
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