For long, “experts” have hailed credit cards to be evil which I strongly contest. More than evil the right words for credit cards are that they are double edged swords which save you and hurt you too. It completely depends on how carefully you handle your credit cards. The implications of careless use of credit cards could be serious debts which will put you in a financial crisis. Here is how you can use your credit cards without getting in a financial crunch.
Not having the Implusive Buyer Syndrome
To keep your credit card spending at the lowest, the first thing to do is to curb your impulsive buying habit. One thing I always like to share with impulsive credit card buyers is that, swiping your card means you are asking someone else to pay for you. If you don’t have that money at the time of purchase, how sure are you of generating that amount later? Segregate your wants from your needs and follow the 4 week rule. If you want to make a purchase, keep the decision pending for four weeks. After 4 weeks if you still want to make the purchase, go ahead.
Scrutinise your credit card statement
The recent security breach at retail giant Target resulted in stealing of thousands of users’ Personal Information and credit card pins. It is very likely that these pins are being misused by hackers for financial benefits. So, it is important to keenly scrutinise each and every transaction mentioned in your statement to find discrepancies. Any anomalies should be reported to the credit card issuer immediately.
Don’t wait for the due date
In most cases, credit card debt piles up because individuals fail to keep up with their due dates. Make it a point to spend only what you can repay at the end of the month. If you keep on carrying a balance, your purchase will cost you more than the actual price because of the interest rate. If possible, have a savings account into which you can transfer the equivalent of whatever you spent that day. In this way you will always be buying what you need and have money to pay it back with as well.
Build your reputation, pay regularly
It is common knowledge that paying your balance on time regularly will get you great credit scores. For a bank, one who borrows and returns in time is a better customer than one who doesn’t borrow at all. Yes, that is a fact! Regular payments will reflect positively in your credit history.
Never go for a cash advance
Never ever go for cash advances on your credit card. However lucrative it might look, cash advances can get you debt bound within no time as interest is charged on them instantaneously. There is no grace period! If you are cash crunched, revaluate your budget and get to some cost cutting measures but do not use the cash advances option.
Check for store cards and save some money
A good way to save yourself some money is to give your bank cards some rest and move on to store cards. To promote store cards there are unbelievable cash back and discount offers which will help you save money. But also ensure that you don’t end up buying unnecessary stuff in your quest for accumulating more store points. The other side of store cards is that if you do not pay in full every month, the interest is very high.
Credit cards were invented for the convenience of consumers. Use them responsibly so that convenience doesn’t transform into a financial struggle!
