Handling Your Credit Card the Right Way

As a credit card user, you get to experience a lot of benefits. You can purchase the items that you want even if you don’t have enough money at the moment, you can pay your bills on time through the account, and many more. Don’t risk your credit card account by monitoring your spending activity. It is good to keep your credit card in good standing so that you can use it with ease all the time.

You can get some information about credit card management by reading the following:

1.  Find a great credit card.

Not all credit cards are created equal. Many have hidden fees and outrageous interest rates. Unfortunately, many cards are loaded with fees. When selecting a new credit card, you want to look at the interest rate, annual fee, cost of over-the-limit and late fees, and where you can use the card. Of course, a low interest rate credit card (one that sports anything below 9.9%) is going to be a better deal than one that carries a 14.99% rate.

When choosing a card, also be sure to think about where you plan to use it.

2. Keep track of your spending

It can be very easy to rack up more debt on your card than you can afford to repay, so it’s important to stay in control. The best way to do this is to keep track of your spending and make sure you regularly check your credit card statement.

3. Practice Self-Discipline

Using a credit card in the right way is self-discipline. You’ll have to tell yourself “no” when you want to use your credit card to make a purchase but can’t pay your bill in full at the end of the month.

When you put money aside to pay your credit card bill, make sure you don’t spend it on something else before your credit card statement arrives. Send in your payment sooner if you think you’ll be tempted to spend your payment.

Start with just one credit card, so you can keep your payments manageable. Several balances and due dates can cause confusing and lead you to debt and a damaged credit score.

4. Managing debt responsibly

If you already have credit card debt, there are a number of things you can do to manage it more responsibly:

  • plan your purchases and determine your priorities. Use credit cards only when necessary and continue to make repayments
  • set-up automatic payments to occur right after pay day, so you can pay down outstanding debt at the time when you have a higher balance available in your account
  • if you have more than one credit card, consider how you can maximize the impact of your repayments. This may be to pay off the card with the higher interest rate or larger balance
  • consider consolidating your debt with a balance transfer offer. Be aware that you may be subject to higher interest rates after the balance transfer period is over.

5. Create and stick to a budget.

Start by creating a budget that outlines all of your income and your monthly expenses. This will help you map how much you have available to spend, and how much debt you can you can afford to take on and repay.

6. Pay It off Every Month in Full

If you can’t pay the card off in full one month, put it away until it is paid off. Be accountable to a close friend or family member and ask them to help you stick to your plan to keep your card paid off.

You don’t need high credit limits, large purchases and numerous credit cards to establish a positive credit rating. Use the good money skills you’ve learned living without credit to use your new card wisely.

7. Only charge what you can afford

Don’t view your credit card as an extension of your budget. It’s highly recommended that you never charge more to a credit card than what you can currently cover in your bank account. People don’t end up with thousands of dollars in credit card debt on purpose. Instead, credit card debt tends to accumulate slowly over time.

By only charging what you can afford, you’ll ensure that you won’t pay any interest and always maintain a high credit score. It’s tempting to spend ahead based on what you know you’ll get paid, but it’s a bad practice. If you lose your job or run into an emergency, you won’t be able to cover those charges. That’s how people start going into debt, and it slowly builds from there. It’s recommended to never to charge more than you currently have in cash.

8. Check your credit report regularly and fix mistakes

 Managing your credit effectively requires that you keep up with what is happening in your credit file. You are entitled to a free copy of your credit report when you write in under certain conditions. Make sure that there are no fraudulent accounts, and that errors are fixed. Inaccuracies can lead to lower credit.

9. Keeping your PIN secure

Don’t store your PIN with your card, or give it to anyone else. If you do, and someone takes the card and uses it, the bank won’t pay you back what’s stolen – they would in most cases if it wasn’t your fault.

Change your PIN to something you’ll remember. You can do this at most cash machines. Pick something you can remember, but not something like your date of birth that others could guess.

10. Don’t use cash withdrawals

Unlike debit cards, you should not use your credit card to withdraw cash for free. If you withdraw cash from an ATM with your credit card, you will have to pay fees and interest which is usually a higher rate than you would normally be charged.

There is no interest free period on withdrawals like there is with purchases so it won’t be a case of interest being charged at the end of the month as usual.

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