Tips on How to Manage Your Credit Card Wisely
The credit card is probably the best invention since sliced bread. If you manage your credit card carefully, it’s that ace up your sleeve that makes life so much easier. However, if misused, well, you’ll be drowning in debt before you know it. Because don’t forget, a credit card is still just a tool with which to borrow money.
In this article, we give you tips on how to manage your credit card wisely. Here goes!
1. Do pay your credit card bills on time and completely.
This seems like a no-brainier, but you would be surprised by how many people miss their bill payment dates. If you have to, set up an alert that will remind you to pay your credit card bills before your due date.
2. Do try to limit the number of credit cards you own.
If you have the means to pay for multiple credit cards, please go ahead and have as many as you want. However, for the rest of us, having too many credit cards is what gets us into serious debt. Ideally, you should not have more than one – or maybe two – credit cards. The fewer cards you have, the better you will be able to manage your credit card spends.
3. Do keep a record of all your purchases.
You must always know how much you have spent on your credit card. This is the way to stay in control at all times. If you lose track of where and how you’re using your credit card, you’re taking the first steps towards debt. Keeping a track of your credit card purchases isn’t really difficult.
4. Do live within your means.
It’s so easy to use credit cards. And that’s the biggest problem with these little pieces of plastic. Spend now, pay later. Very dangerous. You need to ensure that you live within your means. Don’t spend more than you can repay easily; a benchmark to keep in mind is that at the end of every month, you should have some money left over after you have paid for all your expenses.
5. Do Not lend your credit card to anyone else.
A lot of us will give our spouses or children or parents our credit cards to go shopping. This is just not a good idea, no matter how much you trust them. Hopefully, they will be responsible with your card, however, that is not a guarantee. You would be flirting with debt in this situation.
6. Do Not use your credit card for a cash advance.
The interest rates on a cash advance from a credit card are really high. And there are also transaction fees you will have to pay. So when you pay back that cash advance, you’ll end up losing a lot of money.
7. Do Not make high value purchases using a credit card
This is one of the biggest mistakes we make when we use our credit cards. We end up buying really expensive stuff that maxes out our credit limit. Then paying off that amount takes a really long time. And during that time, we also pay for the monthly interest rates and finance charges that keep adding up. What we don’t realize is that the higher our credit balance, the higher is the finance charge that you pay on your credit card.
So, the rule of thumb should be that if you cannot afford to pay off that purchase in 3 months, you should not buy it. You can still make those high value purchases the old fashioned way – save up for them and buy them in cash. Most stores actually offer big discounts to people who make full cash payments for high value items.
8. Finally, try to use cash as much as possible.
Remember, if you manage your credit card properly, you can live a stress free, financially stable life.