Credit cards offer an excellent convenience, eliminating the need for check-writing or carrying cash. Their convenience has expanded to include anything from parking meters to vending machines, making the need for physical cash even less necessary. However, their boon can quickly become a bane if not managed properly. In order to ensure that your credit card usage facilitates your financials rather than adding stress, follow these guidelines:
Begin With the Best Suited Card
The reasons for using a credit card differ per individual. It could be for everyday expenses such as gas for business owners, work-related purchases for government employees, or basis for financing big-ticket items. These are all valid uses, but they don’t all need the same type of card. When it comes time to choose a credit card, check out reviews on sites like HighYa to find one that’s most beneficial for you. For instance, if you’re not a frequent flyer, a credit card that offers miles as rewards won’t be as valuable as one providing cashback.
Understand That Credit Cards Do Not Equal Cash!
At times, credit cards may seem synonymous with cash due to their similar application in transactions. However, it’s important to remember that a credit card is essentially debt. Though they can be beneficial when used responsibly, considering them as a “snooze button” for payments could quickly lead to substantial debt if not paid off timely.
In regard to security, it’s generally safer to use credit cards for online or phone purchases rather than debit cards, as the latter draws funds directly from your bank account. In the event of fraudulent activity, you can collaborate with your credit card company’s security department to mitigate damage.
Set and Stick to a Sound Credit Card Usage and Payment Plan
Swiping your credit card for minor purchases could seem expedient, but it might lead to irresponsible spending. It can be tempting to use the credit card with plans to pay off the balance later. If managed rightly, this approach can be beneficial; you can earn rewards and enhance your credit history by making purchases and timely settlements. If you fail to fully settle your dues by the due date, however, you may quickly accumulate interest fees and an unmanageable balance.
Plan to pay off the balance in full at the end of each month, ensuring that you only purchase what you’re able to comfortably afford, or what you’re sure to be reimbursed for. Avoid using the credit card as an enabler for impulsive spending beyond your means!
Despite their potential allure as status symbols, credit cards should be utilized responsibly, owing to their potential for rapid income and credit depletion. Use them to your advantage to avoid becoming a victim of your own spending habits.
