Wise Use of Your Credit Card

13
November

Using a credit card can be an easy way to make purchases no matter where you are. While credit cards are easy to use, this ease can also lead to some problems for you as a consumer. A credit card in the wrong hands can create a dangerous situation, financially. If you plan on opening a credit card account, you need to understand some basics on how to use your card wisely.

Don’t Buy What You Can’t Afford

One of the potential negatives of having a credit card is that it can take you to spend money that you don’t have. With a credit card, you gain access to credit, regardless of whether you have any money to pay for that credit. This means that you could go out and charge anything that you want to up to your credit limit. The credit limit that is set by the credit card companies is not necessarily based on what you can afford. This means that you could rack up a lot of debt that you don’t have a chance of paying back in a timely manner.

As a general rule, you should only buy things on a credit card that you can afford to pay for. When you get your credit card bill, you should be able to pay it completely off or at least make a good dent in it. If you are purchasing things on your credit card and then leaving the balance is on the account for many months or years, you’re letting the credit card companies win.

Make Payments on Time

When you have a balance on your credit card, you need to pay it off in a timely manner. Every month, the credit card company will send you a statement with a minimum payment listed. If you can afford to, pay off the entire credit card balance by the due date. If you can’t afford to pay the whole balance, you need to at least make your minimum payment before the due date. If you do not make at least the minimum payment by the due date, the credit card company will charge you a late fee and could raise your interest rate. This adds to the amount of money that you have to pay the credit card company overall.

Take Advantage of Points

One of the big advantages of spending money on a credit card is that you can accumulate points. Most record companies have some kind of rewards program that they offer their cardholders. These rewards points can be redeemed for many different things like consumer electronics, groceries, gas, gift cards, airline tickets and even hotel reservations. Each time you make a purchase, you should be able to accumulate some rewards points to use later on. This means that if you have the money to buy something, it may make sense to run the purchase through your credit card companies so that you can get the points for free. This way, when the points get up to a certain amount, you can use them to get things for free. If you just pay for your purchases with cash, you will not be able to take advantage of these rewards points.

If you’re trying to accumulate rewards points, make sure that you don’t build up too much debt in the process. Some people try to build up points quickly without thinking about the long-term consequences of the debt that comes with it. As long as you’re spending money that you can afford to spend, it should not be an issue. When you learn the basics of how to use your card wisely, it can really be a powerful tool for you to use in your financial life.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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