Credit cards are useful to have but many people are frightened of using them, having heard horror stories about friends getting in considerable amounts of debt. A short term loan fromcan help you out if you are struggling financially, but it is better to learn how to use your credit card wisely.
Create a Budget
Credit cards usually offer you agreed amount you can borrow, take this into account when planning your budget. It is better not to spend your limit every month, as interest will build up. Make sure you are aware of your average monthly expenses and income and set yourself a limit which you know you can manage. Don’t go over your budget, unless it is an emergency that you can’t avoid.
Use Your Credit Card for Large Purchases
If you are booking a holiday or making another large purchase, it can be beneficial to use your credit card to make the payment. This will allow you to keep money in your savings accounts for longer, giving you the potential to grow your interest there. Take advantage of a credit card with a 0% interest rate for a certain period of time.
Clear Your Balance Every Month
This is the golden rule of credit card use. As long as you pay at least your minimum balance every month, then you will not be hit by late repayment fees or high interest rates. It is a good idea towhere you can check the balance of your account on a regular basis, to ensure you aren’t spending more than you can repay.
Take Advantage of Benefits
Choosing a card which comes with a generous rewards package is a good idea. Rewards can range from cash back in certain shops, discounts or airline miles. Choose a card with rewards you know you will use, rather than the one which sounds the best. If you only go on holiday once every year then airline miles are probably not the best benefit for you.
Check Your Card Reports Regularly
Make sure that you are checking your credit card statement regularly, to keep an eye out for any accounts you don’t recognise. Credit card fraud, identity theft and impersonation is on the rise due to the more frequent use of online shopping. It is also a good idea to ensure that loans which you know have been paid off are not showing as ‘open’.
Don’t Withdraw Cash
Most people are able to withdraw cash with their credit card, but this can come at a price. There is usually a minimum withdrawal amount at ATMs for credit card users, which is often quite high. You are also charged a fee to withdraw and interest begins building on the cash you withdraw from the day it is taken out.
The key to using your credit card wisely is starting with good habits and sticking to them. The main thing to remember is only to withdraw as much as you are able to repay.