6 ways to be smart with your credit card – You can either be indebted for the rest of your life burdened with credit card debt or use your card wisely for an advantage.They are a great help in case of emergencies and convenience especially in the digital age where paper money has seen a steady decline in usage over the last decade.
6 ways to be smart with your credit card
Pay a little more – Every month when you get your credit card statement of expenses,you will be tempted to pay just the minimum due – which is a fraction of the total amount due – about 3%-5%.This will do absolutely nothing to lower your balance,and is like a trap to keep you in debt forever.
Pay frequently– You do not have to wait till your statement arrives to make a payment towards your card.Small increments even during the middle of the month can significantly make a difference to lower your balance and thereby lowering the finance charges.Not only that but this shows your repayment capability to be excellent and goes a long way towards keeping you in good credit.
Pay interest but not fees – One thing that you just cannot avoid on your card as long as you have a balance is finance charges.This is set at anywhere from 17% to 25% per annum and higher your balance,the higher finance charges you will incur every month.What you can avoid is fees and penalties like late fees,overlimit fees,cash advance withdrawal fees,return payment penalties.These are all in your control as long as you are responsible with your timely payments
Pay quicker – In addition to making small incremental payments whenever you can,you should also make payments earlier than your due date.As soon as you make a purchase on your card,try and also make a small payment online towards the card
No large balances – Two reasons why the balance on your card should be within limits.One for obvious reasons - it will be more cumbersome to pay off if you have a large balance along with increased finance charges and secondly having a high balance gives you a high credit utilization which is also bad for your credit score.
Max out – As far as possible do not overspend on your card just because it seems “free”.Nothing is free,in fact its quite expensive to pay back with high finance charges added to it.Pushing your card to its limit will eventually max out the card and could also trip it over the limit,which will give rise to a whole lot of different charges for you to face.
How will this help you – If you follow these 6 tips that i shared with you above,then there is a good chace –
- Your total outstand din on your card will reduce much faster and you will incur less finance charges
- You credit score will improve over a shorter period of time
- You will earn some positive points on your credit report when it is submitted to the big 3 credit bureaus
- There is a good chance that in future you will be cleared for a better personal loan,mortgage or car loan – if you choose to apply for one.