Credit cards are the magic plastic cards that give us the power to buy. Today`s financial order demands us to have sophisticated means of readily disposable cash at all times. But a lot of care and caution must be exercised if you want to make use of credit cards in the right way.
Credit cards are really easy to maintain and use, plus it gives us more accountability of the money we spend every day. All the money we spend using credit cards are generated as a bill which we have to pay at each billing cycle. Also, if we have an online account in the website of the credit card company, we can view the billing statement at any point of time. Almost as soon as any payment using the credit card is processed, the account that is tied to the credit card number is updated. This way, we can manage all monthly expenses and keep a tab on how much we spend.
Credit cards offer us so many advantages and flexibility if used well. It offers us security, comfort of carrying ready to use cash and freedom. No longer will you have to carry a check book or large amounts of money, if you are planning on a shopping spree. What is more, credit cards have attractive reward schemes, which have loads of incentives for every dollar you spend.
Keeping aside the fact that credit cards are extremely user friendly, it has its downside. If you do not know how a credit card should be managed, it can lead to some undesirable financial circumstance, and can land you in financial debt. Understanding the billing system of a credit card is crucial to maintain finances. Every month, after you receive the bill for your credit card, the amount due must be promptly paid before the due date on the bill. If the bill cannot be paid in full, then paying up as much as possible helps a lot because, a very high interest rate will be applied to the total balance outstanding. Usually, credit card companies charge as high as 20% interest for any amount outstanding. This means, if your balance due is $100, you will be paying $20 as interest rates alone, which will bring your total amount due to $120.
Getting used to credit system takes some time. But if you know how to use your card responsibly, then there is no reason not to take advantage of so many benefits.