Smart Credit Card Tips

Credit cards do present some advantages like convenience, cash rebates, bonus points, airline miles and free gifts, but if you are not careful with how you use them, you could get into financial trouble and ruin your credit history as well.

 Financial experts mention a few simple tips which help prevent or reduce credit card debt. 

Pay your entire balance every month

Credit card statements often include a “minimum amount due” in your billing statement, making you feel safe about not paying off the entire balance.  Truth is, by not paying the entire amount due, you get charged for interest on the balance, so you actually end up spending more. 

Pay before or by the date your balance falls due.

Late payments are charged high penalties that you could easily avoid by being prompt. If necessary, set up automatic payments or reminder systems to avoid late payment.

 Limit the number of cards you have.

Having more than 1 card means greater spending capacity that can be a problem if you tend to max out all your cards. While extra credit cards can come in handy when your usual card is lost, damaged or stolen, experts advise that you should only keep as many cards as you feel you can manage responsibly and get rid of or cancel the rest. 

 Read and understand the fine print.

Credit card applications often come with fine print stating the terms and conditions such as the interest rate for unpaid amounts, payment due dates and cut off dates, and your credit limit. Knowing the important details of your credit card allows you to manage cut off and payment dates wisely. 

Follow a budget 

If paying off your credit card bills is already a problem, then you’ll have to create a budget showing your income and expenses.  Once you see how your money is being spent, you should be able to identify your spending priorities and eliminate what you don’t need. Plan how to spend your money, making sure to prioritize debt payments. 

Using your credit cards responsibly not only frees you from credit card debt with its burdensome interest and penalty charges but it also protects your credit history which may one day help you get decent rates for that important home or car loan.

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