How to be Credit Card Savvy
Although credit cards are relied upon far too heavily by many people, they do have some fantastic advantages - when used properly, that is! Some examples of how credit cards are very useful include convenience, online banking, e-commerce, theft protection, consumer insurance, and building a good credit profile. Below we offer some tips on how to use your card(s) effectively; that is, without falling into unaffordable debt.
Tips for Savvy Credit Card Users:
Tip #1: Pay your balance in full. Let's say you didn't have enough money to pay the rent. Would you send in just 2% of what you owed and tell him to charge you 16% interest on the rest? Most definitely not!
Think of your credit card balances as you would rent on a flat. The very moment that you start carrying a balance is when those interest charges start adding up. Savvy credit card users pay off their cards in full each and every month, avoiding costly interest charges. Can't do it? Consider getting a card that requires the full balance to be paid each month. There may be higher annual fees attached, but will keep you from accumulating even higher interest payments. (And always remember: every time you start racking up interest charges, it means everything you bought on your card cost more than you thought it would when you took it to the cashier!)
Tip #2: Limit your spending. Figure out right now just exactly how much money you can realistically afford to pay on credit card debt at the end of each month. Once you have this figure, promise yourself not to exceed it. Savvy credit card users know their limits and stick to them!
Tip #3: Shop online. Studies have proven that most people have a tendency to make far fewer impulse purchases online. Why is this? Well, part of it is that you cannot smell, touch, or hear products when shopping online. Online shopping also lets you comparison shop more easily, as well as keep a closer eye on what you are spending.
Tip #4: Use just one card. Having just one credit card makes it easy to track all of your purchases. An added bonus: it's a lot easier to pay one bill rather than three or four! Savvy credit card users know that if they run close to the max on one card, then that's a sign that they are spending too much. It's hard to know this if you have balances spread out over several cards.
Tip #5: Choose the best card(s) to suit your spending habits. There is a huge variety of cards out there with something for everyone, so ensure that your choice is one that suits you best. For example, if you do tend to carry a balance each month, find a card with a fixed low interest rate. If you frequently buy valuable electronic or computer equipment, consider a card with extra warranty protection.
Tip #6: Check your statement each month. It's really important to monitor all of your credit card statements for inaccuracies or fraudulent activity. The last thing you want to have happen is that you work hard to pay off your cards each month and then end up having to pay for mistakes or someone else's charges. Keep track of your charges each month, then when your statement arrives, check your records against activities showing on the statement. If you find any discrepancies, no matter how minor, make sure you report them to the credit card company immediately.
In closing, by following the simple steps above and being vigilant with your spending, you too can be a savvy credit card user!
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