Top 7 Tips to Make your Credit Card your Friend and not a Foe
Online shopping using your credit card is as easy as it can get. Swiping your plastic card for your purchases is also a no-brainer. However, sometimes, we still get trapped in a credit card debt, why is that so?
It is because a lot of us still do not know how to use a credit card effectively. These cards are a flexible and secure and convenient way of making payments, building your credit, and meeting regular expenses. But this remains true only and only if you use your card properly.
If not so, then it takes no time for your credit card to turn into a foe from a friend. Sometimes, using these cards in the place of cash, especially on those items whose value cannot be specified directly (like tickets), may mess up our financial judgments. We may get lured into making more purchases than we had initially planned.
To avoid all of this financial mess, we have listed some tips for using our card to benefit, and not against us.
Making Payment of the Entire Outstanding Balance Monthly
If you do not wish to keep enmity with your card, you must save yourself from falling into debt on your credit card. Are you wondering how?
It is pretty simple; you must only charge the amount that you are capable of affording. Other than that, you must make payment of your entire credit balance monthly, or a few number of times in a month, only if it assists you in keeping ahead of your debt.
It may sound difficult, but keep in mind, this is the main rule to use a credit card if you do not want them to use you. Hands down, this is the best way to prevent falling into the card debt. This way you can also avoid the payment of interest on your expenses.
Staying Aware of Your Credit Limits
Your credit limit is determined by your card provider when you apply for credit card. In case you think you may end up exceeding the limit, and would not be able to afford it, you can request your provider to reduce the limit to the amount you can manage every month.
Your bank or card issuer would agree to your request readily as what they ultimately want is that you repay their funds. These providers have the option to change your credit limit instantly. Not all of you wish to maintain a high credit limit, and that is anything but embarrassing. In fact, keeping an affordable credit limit helps you in using your card to your advantage.
If you do not want to contact the bank for this purpose, you can decide a credit limit for yourself and make transactions on your card only up to that limit. After you reach this limit, put your card away for the rest of the month, or until you make the entire payment of the bill. By doing this, you can maintain your budget while staying on top of your credit card bill.
This will also let you maintain a higher limit, which can be useful if in case you ever end up in an emergency situation.
Always Clear Your Bills on Time
Now that we have already discussed how paying your bill in full can be beneficial for you, it is essential for you to know that paying your bills well on time is extremely important. Some of the card issuers in the UAE charge high fees for making late payments.
And you must know that a huge portion of your credit score depends on your history of payments as it determines your repayment capacity. Missing a payment can harm your credit rating big time.
Hence, clearing all your bills well in time is an ideal way of improving your credit history and keeping your rates of interest low. With time, this will be advantageous for your credit health altogether.
If in case you think you are forgetful and will end up missing the due date of payment, it is suggested that you mark this date on a calendar or put a reminder on your phone a few days before the payment date. You also have the option of automatic payments. That is, you can adjust your account settings online such that your bill gets cleared automatically on a certain date every month directly from your bank account.
Make Use of Your Credit Card Only for Hefty Purchases
Those who suffer from debt on credit cards say that it gradually grows on them, and that is quite true. Sometimes, the little purchases, when left unchecked may become huge with time. For saving yourself from these tiny-purchases-turned-huge, try to make use of your card for hefty purchases only.
The most convenient option in such situations is saving in cash for your shopping. Later, on making a huge purchase through your rewards card, you will get reward points. Hence, you will have money to pay it back right away.
As an alternative, you can make use of your credit card for huge and necessary purchases. You can pay off this over a period of some time maintaining a stringent timeline. You must, however, be aware that you will have to bear some interest in enjoying the benefit of splitting the payments. If you choose to follow this alternative, you must plan your finances and make sure you follow this plan.
In case you have already made a big purchase using your card, not buying anything else till the time of making the repayment for this purchase can be beneficial for you. After all, nobody wants to move on with debt in their lives.
Make Use of Your Card to Support Your Budget Planning
If you feel that you have a sufficient finance management skills, you have the option of using your credit card for supporting your budget. According to this tip, you should make a written budget, then make purchases using your card staying within the spending limit as pre-decided.
This way you can earn amazing rewards for the purchases you would have made anyway and also enjoy the certain protections offered by credit cards.
For keeping up to date, you must sign in to your account on a regular basis. Sometimes, looking at your expenses on the screen may keep you aware of the amount you have already spent.
Select Credit Cards with More Benefits
A lot of you may not be interested in the rewards offered on a credit card; however, it is still recommended that you consider these benefits.
For instance, there may be some of the cards available in the market that offer benefits like primary & secondary rental vehicle cover, complimentary travel insurance, extended warranties, and purchase protection.
If you clear your entire outstanding amount monthly, you would be able to enjoy these benefits on your credit card for free.
Make the Most of All the Rewards Offered
To enjoy the best out of your card, you must have proper knowledge regarding the rewards on it. A rewards credit card is loaded with a lot of benefits including air miles, loyalty points at hotels, cash back and more.
You can earn these rewards just by making use of your credit card for your daily expenses like payment of utility bills, groceries and more.
If you are carrying some card balance, you will have to pay interest charges on the purchases you make. Hence, your attraction towards the rewards on your card reduces.
To get out of this condition, you must avail of your card rewards only when you are sure about your repayment capacity, that is, you will be able to pay your entire balance. If you are not sure about this, the rewards will not remain that worthy.
Suffice to Say!
If you wish to use your credit in the correct manner, you do not have to abandon your credit cards completely. There is always a solution to everything.
You can start following some simple tips right from the time you apply for credit card in UAE, which will allow you to enjoy the credit card rewards without the risk of the downsides.