How to use a Credit Card Wisely?
Utilization of the credit cards in our life has become omnipresent. Because they offer you the ability to pay for items when cash is a bit tight. However, this financial tool doesn’t come with a mutual telling how to use it wisely. Luckily, there are many people who found some tips about using a credit card responsibly. Here, in this article, we will cover those tips that I have learned along a way. So, let’s take a review of Best credit card uses.
Best Credit Card Uses Tips
Live within your means
A credit card is a convenient way to pay for the things you want, but it comes with extra cost. So, use credit card when it is necessary. For instance, if someone financial status has already filled with debt, then it worth to think twice before sweeping a credit card.
Pay Your Bills on Time
It is crucial to pay off bills on time if you want to execute credit card uses wisely. Not only it saves you from penalties and other additional interest charges but also builds your credit history. Try timely with the credit card bills and borrow what you can afford to pay back.
Carry Credit Card Balance Responsibly
If you asked me how to use your credit card wisely, I would suggest you first carry credit card balance responsibly. Always aim to keep your balance bellow or around 30 percent of the credit limit at any time. To make credit history healthy try to borrow as little as possible. So don’t release minimum payment to avoid penalties. Try to clear the full balance each month to minimize high-interest rates.
Learn from a Credit Card Statement
A credit card statement is a financial document that gives details of all the transactions made by a credit card holder. The best way to check your credit card statement, keep your all credit card statements each month and check charges. While checking statements, ask yourself, did I sweep a credit for a right item? If you realize that you have spent too much money on unnecessary things then stop doing this. How to use a credit card wisely is directly promotional to how you sweep a credit card for a necessary item.
Create and Stick to Budget
Creating a budget and sticking to it is important for gaining financial stability. I understand money management is difficult because it needs discipline and determination. But once you plan a money management map, your money will never end before the end of the month. Furthermore, in a Best credit card use, this budget map will give you a clear picture of how much you can spend in a month and how much debt you can afford.
Rewards Points for Regular Purchases
One of the greatest advantages of credit card uses is rewards points you will earn. By purchasing items from the credit card regularly you will earn rewards points and cash backs. Keep in mind for gaining reward points don’t make purchases you don’t afford it to pay off. Because the costly interest will be more than the rewards points you will earn.
Understand How Interest is Calculated
Interest is assessed on your average daily balance. To become debt-free and to know Best credit card uses it is important to understand how the interest rate is calculated. If you are carrying a balance it takes more than a year to pay off. So, clear your balance every month to avoid painful high-interest rates. Interest rates come in various sizes, but for a credit card, it comes in three categories include fixed, variable and potential. It’s all up to you to choose any of them. The answer of how to use the credit card wisely is also depended upon the which interest plan you have selected.
Use a Credit Card as an Emergency Fund
It is a good idea to use a credit card during rainy days. If you know you can pay off all the debts in a month, then you take the advantages of a credit card uses. Personally, I treated my credit card as an emergency fund. People definitely have some idea what would they do in an unexpected foreseen situation. But, if all the ideas get fail, then relying on a credit card will definitely help you.
Reasons you can get into Credit card Debt
Using a credit card is not painful, but the process of paying debt can be. But, it is possible to pay credit card debt stress-free, if you know how to use the credit card wisely. Knowing monthly expenses, salary, and interest rate of a credit card can help you to strategize pay off plan. The best possible advice I can give from my experience is that if you have a monthly payment, you could pay off at the middle of the month and rest at the end of the month.