Credit cards are like a double edged sword. They could work both ways depending on how you use them. They could be beneficial to you when you use them properly. They could also wreck your finances completely when you don’t use them properly. Here are some tips to use credit cards in the right manner.
A lot of people treat their credit cards as a free gift. That is why they don’t think twice before swiping it for unnecessary expenses. You need to use the credit card judiciously just the way you use cash. For example, when you want to buy something, but don’t have the cash to afford it, you walk away. Similarly, with credit cards too, you need to spend only when you are doubly sure that you will be able to repay the debt on time. That way, you would always ensure that your bills aren’t way above what you could afford.
The ideal way to use the credit card is to avoid debt at all costs. The moment you end up with debt, where you haven’t paid the bills before due time, you are charged a late fees as penalty. You are also charged interest on that debt. If the debt is high and the interest rate too is high, as is the case with credit cards, it will end up increasing your debt further. So make sure you always repay the debt before the due date. The key is to spend only when you have money in your savings account or when you know you will get the salary at the end of the month to repay it easily.
Late fee is one of the unnecessary penalties that you can avoid by repaying the debt on time. You should also avoid overdraft fee for crossing your credit limit, something that you shouldn’t be doing at any stage. Credit cards sometimes charge you cash advance fee for withdrawing cash from the ATM. There are other types of fee associated with credit cards as well, like the charges for submitting a check with insufficient funds in the bank. You need to avoid all these penalties.
You will be able to pay your bills on time, if you don’t spend a lot. You can manage that by buying only what you need instead of being carried away by shopping rewards.