Credit cards are the best way to get introduced to the credit system and to learn to make the most in a credit driven economy. To handle credit cards well, one has to know what is beneficial about it and what can cause some trouble. Credit cards are great if you pay your bills on time and use it well without overusing your credit limit. They can work against you if you miss payments and buy more than you can pay off using them.
Using credit cards well, plays a particularly important role in managing bills without landing in debt. It is simple if you plan everything ahead. Note down all your necessities for the month before going shopping. That way you will know what you should spend on and how much will be left out for little indulgence.
If you are going shopping and you get reward points for spending through your credit card, then it makes sense to use it for big purchases that take up most of your bill. For example, grocery shopping can be done with your credit card and other small purchases like buying a donut or a coffee can be done by cash. You will not realize it but these small amounts can snowball into a large bill that will be difficult for you to pay during the end of billing cycle.
Paying credit card bills in complete will keep your credit scores healthy for a long time, and will make it easy for you to deal with financial emergencies. Compulsive shopping can lead to large unpaid debts, which not only destroys your credit score, but also makes it more difficult for you to manage monthly expenses. Credit card interest rates make it difficult to come out of any debt situation and so it is best avoided. Think twice when you plan to exceed your monthly budget. All of us like to indulge in a shopping spree once in a while, but even then, you must know what you can pay off in complete.
Reward points and cash back schemes can be used when you have a large monthly bill to pay off, due to some big purchase. Plan exactly when you want to redeem these points and then make the big purchase. Use your reward points frugally, but make sure that you use them before their validity expires. Collecting the reward points and using them when you have a bit of financial strain can help you come free without a debt.