In this article, we will share with you, how to use credit cards wisely. If you use it wisely it could be a useful tool, if you use it unnecessarily then it can be dangerous means you can fall into debt. So read this article to understand how to use credit cards wisely.
Credit cards are risky but not harmful. It works as a tool like other tools, if you use it wisely you can get benefits. So keep your eyes on credit to avoid debt. When you use it carefully you get a lot of financial benefits.
How Credit Cards Work
First, let’s review some basics.
If you purchase something through a credit card, it means you are taking out a loan from the card issuer and you pay that amount to the card issuer. If you return your all used fund in full every month, you avail the benefit of a short-term interest-free loan from a credit card.
This interest-free loan is a good thing if you pay your balance every month. But If you are late to pay your balance then you have a pay balance with high-interest rates.
Why Use a Credit Card?
If credit cards are risky, why use them? We would like to clarify one thing: If you are not disciplined and you have doubts that you could not pay the balance on time then it leads you to debt. So you should not use credit cards.
Followings are the reasons why people use them:
Convenience: Users can carry these plastic cards anywhere rather than carrying cash. Many users would like to keep a record of spending.
Protection: Many credit cards offer a number of features to protect your purchases. Some offer insurance for things like vehicles etc. The best thing is if you lose your wallet, your cash will be gone. But in the case of a credit card, you can block your credit card by calling the card issuer and take another one by paying a few fees.
Credit Score: If you use a credit card carefully then it will help you to increase your credit score. A good credit score helps you to get auto loans and other financial products at the best rates- including other credit cards.
Rewards: These days many credit cards offer a lot of benefits. Some offer discounts on air travel, even access to airport lounges and others offer cash-back facilities.
Above mentioned points are meaningful if you use credit cards wisely. If you do not pay the balance then you could get cash-back offers for months as well as hurt your credit score. If you pay the balance every month, you can get more valuable offers.
Also Read:- How To Get A Credit Card Without No Credit History
Essential Credit Card Skills
Credit cards are like a hacksaw, if you use them wisely you can get a lot of advantages and if you use them carelessly then they will hurt you. Let’s see some important skills of credit cards.
First and foremost: If you have a credit card it does not mean that you have a license to spend. If you use a credit card to pay more than your income, it will hurt you; it is only a different way of making payments.
The following are important skills of uses credit cards wisely:
- Read the terms and conditions carefully before applying for credit cards. Term and conditions of credit cards could be confusing
- Keep your eyes on each month’s statement. Due dates, fees, and interest rates are subject to change.
- If you find anything wrong with your bill, never be afraid to speak up, call customer service.
- Always use trusted websites for payment, and don’t use insecure websites for making payments. Keep aware of duplicate websites that could be similar to the original, and check the spelling of a website properly before making payment.
- Lastly, pay your bill on time. Do not use credit cards to buy expensive things that you cannot afford.
How to Use Credit Cards Wisely
Using a credit card is not fun, it is a serious matter. When buying something via credit card you should consider how to pay the balance each full month. If you miss your payment then you could have to pay higher interest.
- One should never buy with a credit card unless you have enough funds in the bank for it. You can use a credit card if you are getting cash back on the credit card. Make sure to pay that debt on time.
- Always pay your balance in full every month. You should not carry a balance, make this habit for a lifetime.
- Try not to use a credit card for a subscription plan which comes with an auto-renew facility. If you forget about that subscription then they will deduct money automatically every month. Before making any subscription for entertainment, etc read the terms & conditions of that plan carefully.
- Always set a limit to using credit card balances. For example, we set a limit of 10,000 rupees, so we cannot use a card for making payments of more than 10,000.
How to Choose a Credit Card
There are various types of credit cards. Every credit card has its own advantages and disadvantages. Before applying for a credit card you have to decide what features are essential for you, then take time to find a credit card.
Keep the following points in your mind when you looking for the perfect card:
- Spend time to find the perfect card that meets your needs, do not apply for the card before proper research.
- Do research about those cards which offer cash-back or other offers.
- You should watch if there are any extra fees, some cards carry extra fees. So carefully choose the card
- You should research which card offers more features than a low-interest rate.