A credit card is one of the most convenient ways to purchase for things that you want without dealing with cash. However, some people tend to forget to pay their credit card bills or even continue to use their credit card even if they know that they cannot afford to pay for it anymore. These are just some of the usual outcomes of mishandling the credit cards. Thus, these tips below will guide you on how to use your credit card wisely.
Pay your credit card on time
Make sure to always pay your credit card on time. When you get your credit card statement, immediately check when the payment is due. This way, you can avoid the extra charges such as interest and late payment fees. For you to be able to pay on time, you can consider setting up a direct debit to pay a fixed amount off the balance that you owe for every payday. However, you have to make sure that your payment can cover the minimum monthly dues of your credit card.
Maximize your credit card repayments
Put in mind that when you only pay the minimum repayments on your card every month, you will have to pay a lot of interest which could sometimes take years to pay off your entire credit card debt. However, if you are struggling to pay more than the minimum monthly repayment, you can consider switching to a card that has a lower interest rate. This way, you can pay off more when you can. Always remember when you want to switch, make sure that you close your old credit card so you will not end up with more debt.
Set a sensible credit limit
Always set a credit limit that you can afford. Your credit limit should always be an amount that you could repay or be able to pay. This way, you will not be tempted to spend more on things that you cannot afford.
Reducing your credit limit
If you want to discipline yourself and avoid the temptation to overspend and buy things that you do not actually need, ask your credit card provider to reduce your credit limit. You can actually do this by calling your provider or by visiting a branch. You can also do this online. Commonly, your account will be updated within 1-2 business days.
Invitations to increase your credit limit
Do note that credit card issuers are not allowed to send you any invitations to increase your credit limit. This includes sending you an email or contacting you about this through online or by phone, even if you have previously opted to receive these types of offers. This rule applies to both new and existing credit cards.
You can always ask your credit card issuer to increase your credit limit any time you want. If you want to increase the limit for you to be able to make a special purchase, aim to pay the debt down quickly. Afterward, lower back your credit limit to a more manageable amount.
Don’t use credit to make ends meet
If ever there is an unexpected emergency that happens or if you are just running low on cash before your due date, using a credit or taking a cash advance is not going to work for you in the long run. It may get you through the immediate crisis, but you will just end up with even more debt. You also cannot rely on your credit card for paying your mortgages, phone bills fines, gas, electricity bills, and water bills. It would also be advisable to see a financial counselor that can help you sort out your debt issues and to reduce your reliance on credit cards.
Use store cards wisely
Most people are tempted to get a store card if they regularly shop at a particular retailer. It’s because paying with these cards usually earns them rewards points, get discounts, or receive other exclusive offers. Always think twice before you sign up for store cards because there are service fees, annual fees, or other fees that are often attached. There’s also a chance that the rate might be higher compared to other cards. Make it a habit to check the terms and conditions carefully to ensure that you don’t use up your money on charges or fees. Imagine how much you could save if you combine the extra charges or fees you’ve paid in the past.
Check your credit card statement
One of the most effective ways to check your monthly statement is to keep and organize all of your credit card receipts for each month and then take them off against the charges on your statement. This way, it can help you double-check what you have been charged or if the bill matches the total amount of things that you bought. You also have to check if you’ve been charged for things that you did not buy.
However, if you were not able to keep your receipts, you can always check your credit card statement. You can look for the charges by companies that you don’t recognize, unusual or large charges, duplicate charges, and changes in direct debit amounts. If you see any transactions that you did not make, contact your credit card provider immediately. They may be able to reverse the transaction.
Close your credit card properly
If you wanted to close your credit card, make sure to follow the steps of your bank properly. Cutting your credit in half will not stop the provider from charging you with fees. You should go to your branch or check online on how to close your credit card.
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