Credit Wisdom

Credit cards have become a lifeline for everyone in modern times. However, this much-sought after boon can be a real bane to your finances if not used with care. Are you facing problems while managing your credit card balances? If so, don’t regret over it – you’re in the same boat as other consumers. Use these simple tips to stop adding to your existing credit card debt and start regaining control of your finances.

The more credit cards you have, the more you may be tempted to spend and the more difficult it will become to keep a track of how much you have spent and when the repayments are due. Do remember that credit cards are the most expensive types of loans available in the market, and whether you miss your credit card deadline due to an oversight or because you have inadequate funds, you will have to pay heavily. So, while credit cards are extremely handy pieces of plastic, ideally, they should be used as a temporary substitute for carrying cash, And, if that is the only motive you have when you carry a credit card, you will find that having one or at most two is quite sufficient.

The rewards you can earn from credit cards, while a nice perk, are worth far less than the extra interest you’ll accrue if you can’t pay off the money you spend to earn such bonuses. Credit card spending just to gather reward points may not be very healthy. You will soon realise that even though you have high reward points on your card, you will have to pay hefty bills, sometimes even on useless items made unnecessarily.

Besides inadequate circumstances, you should have your budget under control enough that you can at least pay for your monthly necessities with your monthly income. By keeping required purchases like groceries and utility bills off of your credit card, you’ll be taking a major step in the right direction to getting your spending under control. Always draw up your budget for such purchases and use your credit cards within this limit. You should simply know when to use a credit card and when not to.

It’s convenient to pay off the minimum monthly payment when you are under financial duress. Try to avoid it as not only will you never pay off your bill, but the interest rates that credit card companies charge will actually keep your bill growing every month. Instead, send as large of a payment as you can afford to. Where possible, reduce your spending in other areas to focus on paying off your credit card debt.

To meet urgent needs, drawing money from an ATM through your credit card is an easy way to combat cash shortage; but have you realised the impact it will cause on your finances? Not only is the interest rate charged on the advanced amount, but this also gets charged from day one itself.