Credit cards can be useful, but they are also potentially dangerous things. When provided with a credit limit that on the surface doesn’t appear to affect their bank balances, many consumers can end up overspending on their credit cards and go into debt. Credit cards are only really useful when they are used in an emergency or when making especially large purchases. Bearing the following pieces of advice in mind will help you make sure that you don’t overuse your credit privileges and end up getting into financial difficultly later on.
Pay Your Balance Quickly
One of the quickest ways to get into trouble with a credit card is by accruing interest. Credit card companies require a minimum amount to be paid off each month. If you continue to add purchases to a card that already has a deficit, then your minimum repayment figure will go up and up. Pretty soon, you may find that you are only paying off the interest each month and not making a dent in the overall balance. Make sure you keep up monthly payments of a sizable figure to help take large chunks out of your debt in one go. If possible, pay it all off at once.
Don’t Pay Late
This is another common problem with people in debt. Putting payments off because of poor cash flow or bad financial planning can lead to serious problems. Paying a balance late reflects badly on your overall credit score. If you consistently pay bills later than 30 days after their due dates, then you may be the subject of an investigation. Even if you can’t pay off the entire balance on time, at least try to pay some of it off.
Use a Prepaid Credit Card
One way to avoid the regular mishaps of having a credit card is to use a prepaid card. These cards keep you out of financial trouble because you can only spend the money that you have, rather than using credit that you don’t have. You can control spending with the REACH card to help you keep out of financial trouble.
Keep Your Old Credit Cards
A good way to build a strong credit rating is by using a card that you have had for a while. The longer you have owned your credit card, the more trust you will have with the banks because the chances are that you have been paying off debts for a long time. This means that the chances of your become a risky investment for them further down the line are smaller.
Banks will be more likely to reward you with bonuses such as a higher credit limits and lower interest rates.
A little credit can be a dangerous thing, but if you pay attention to your finances and keep and eye on what your credit rating is like, you should be able to keep yourself out of financial trouble. How have you managed your credit? Have you encountered any difficulties not include above that other people should avoid?
