Using credit cards wisely for financial well being

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Using credit cards wisely for financial well being

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The only way to secure your financial well being is by ensuring you use your credit card wisely. Using these pieces of plastic without any restraint will only lead to increased credit card debts that cannot be closed anytime soon. This will result in adversely impacting your credit history that will have repercussion on various aspects of life including finding a job, renting an apartment, buying a car or availing any other type of loan. Hence, every person with a credit card in their wallet should know the basics of using their credit cards wisely to prevent getting into debt traps.

No card holder should use their card to make regular purchases. Consumers have to understand the difference between necessities and luxuries and use their card to purchase things that they cannot afford to live without. All other purchases should be kept aside for a time when you have enough money in your saving account to afford it. Using cash in place of card is another way to curtail spending on the card.

Every card holder should ensure they pay off their dues each month. Though it is recommended that you pay off the balance in full each month, it is not possible to do so for some people most of the times. In such cases, it is imperative to at least pay off the minimum due to avoid incurring late payment fees and overhead financial charges. Avoiding defaults will also reflect well on your credit history.

Another important aspect card holders need to know is that closing the cards is not the way out to eliminate debt. In fact, closing certain cards negatively hampers your credit score rather than improving it. You will need to either reduce the debt to $0 on the card or transfer the outstanding balance onto another credit card before closing the card on hand.

Due to a sudden financial crunch, if you are unable to repay your dues, it is recommended that you call up the bank well in advance and keep them informed. The bank and you can decide on certain favorable payment terms which will ensure that you repay the dues without the bank having to write off your account. In fact, most lenders are willing to renegotiate payment options rather than not getting payments at all. If you don’t want the dues on your credit card to have an impact on your credit score, then, ensure you don’t use more than 30% of the total available credit limit on your card.

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