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How to Use Credit Card to Your Advantage

by Jhoana Shaynne

People have mixed ideas about getting a credit card or not.  Some may believe it is financially advantageous, while others may think that it is one of the contributing factors for people to be indebted.  Well, it all boils down to a straightforward factor: usage.  How you use your credit cards effectively will spell out if having one is for your advantage or disadvantage.  Scroll down and decide for yourself if a credit card can indeed be an advantage.

Learn to Manage Your Credit Cards

Keep track, monitor, check, manage are words that we usually hear when managing account or finances.  The same is applicable for credit card use.  Regularly check your credit card statement.  Take time to review your monthly report issued by the credit card company.  Being busy should not be an excuse.

The information you will find in your statement will aid in your spending decisions.  You can download the credit card app to manage your spending and transactions more conveniently.  In the app, you can also check daily and weekly transactions.

Most are posted “real-time,” so lagging is not usually a problem.  You can now make immediate decisions based on current spending.  Use Excel or Apple Numbers to record expenditures and payments.  Make sure that you do not purchase amounts that you cannot pay on the due date. When you have precise data, you can make clear decisions and contemplate on better options.

Self-control is a crucial factor.

Let us talk about the credit limit.  You should know your credit limit.  Although it is true that credit card companies – once they see you have good-paying habits – will keep on increasing your credit limit.  This also increases your temptation to spend.  In your mind, you think that you have more.

You can always ask them to decrease it to fit the amount that you can pay with your current income.  So that you do not max out your credit card, set a self-enforced limit below the credit card limit.  Say about 75% to 80% of the real credit limit.  When you reach this limit, stash your card away until the next billing cycle.

One important thing you need to master is the art of saying “NO” when you cannot pay the amount due in FULL for the month. Here’s a common thought: practice makes perfect.

Do not use your card for reasons that are not intended for.

Do not get a credit card because you cannot make ends meet.  Incurring credit will only delay the anxiety of paying.  Having to deal with future due dates, interests, and charges will only make your situation worse.  Also, do not treat your card as an addition to your budget.

Credit is borrowed and not earned money.  However, once cash flow is perfected, you will be surprised that credit cards can be used as a complement to your constrained budget.  As credit cards come with cash advance; meaning you can withdraw money from ATMs, be aware that interest and charges are huge.  It is more than 50% loan rates.  That is one reason how credit card companies earn money.

Payments also play a vital role in using your credit cards for your advantage.  Make it a point to pay the amount due on time.  Never pay late.  Interest kills.  As much as possible, pay your card in full every month.  If you cannot, as this may be a plausible scenario, plan a payment scheme to fulfill the obligation the soonest time possible.

As a bonus, take advantage of the cards’ rewards and perks.  You will undoubtedly feel that credit card companies take much, but they also give back ostentatiously.  You may want to choose a card that has one-time membership also.

Keeping these simple guidelines in mind will turn your credit card usage to your advantage.

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