A credit card can be our best friend in times of need and unexpected circumstances. But they can be our worst enemies, too. They can give you the best deals and perks that you can’t get from regular purchases, but they can also push you down to financial struggles if you do not know how to manage your swipes for every purchase you make.
Here are 11 things you must always bear in mind before and after you swipe that mini plastic card to deal with your expenses and due payments responsibly and no hassle.
- Pay on time. Paying on or before the due date means you’ll only pay the exact amount you spend during the current billing period. It saves money from unnecessary extra charges, doesn’t it?
- Check all transactions listed on your billing statement. With all the phishing, hacking or illegal means of stealing from a person or one’s identity that occurs every day, it would not be impossible that someone might have hacked into your card details and use your information to pay for the unknown person’s purchases. Once your monthly statement arrives, cross-check all listed charges if they are legitimate or are questionable transactions.
- Track your spending every month. Keep receipts of transactions you made using your credit card, track online purchases, and try to recall if all charges on your credit card are made by you.
- Use your credit card for 0% installment purchases. Always go for the 0% installment big-ticket purchases to avoid extra interest charges. Of course, nobody wants additional charges!
- Track and use the points you earn. Most credit cards have reward points systems in exchange for every peso you spend using your credit card. You can redeem certain rewards in the form of gift certificates, cash, free credits, and dining, shopping, or travel perks when you use your credit card often. Take advantage of this to maximize the benefits of using your credit card.
- Use your credit card often to build your credit score. Sometime in the future, you may need an exceptional credit score in order to make loans for big-ticket ventures, such as buying a house, starting a business, or buying a car. A great credit score can help you establish a good standing as a payor, making you a potential client for banks or other financial firms that may offer you a loan. Also, your credit card issuer can use this as a basis to offer you upgraded cards and perks in the long run.
- Don’t fail to pay the full amount due. As much as possible, pay for all of what you spend within the month in one go. This way, you can avoid finance charges or late payment charges that will add up to your total unpaid balance.
- Don’t max out your credit limit. Only spend for what you need and what you can afford.
- Don’t settle the minimum amount only. While paying the minimum will help as you only need to shell out a small portion to pay for your credit card bills, this may be inconvenient in the long term because it will keep you from being in debt on your credit card longer, which may result to piling up of interest and penalty charges.
- Don’t use your credit card to splurge or do impulsive shopping. If you don’t want to get surprised about how much you have to pay in a month, be mindful of your spending habit. A swipe of a credit card here and there will not feel burdensome until you see your monthly statement.
- Don’t treat it as your own money. As it is called, it is a “credit” card. The credit line that you have is basically funds that a creditor lent you that you eventually need to pay for. So, use it responsibly and as much as possible, only when highly necessary.