Credit cards can potentially offer some key financial benefits when used correctly. Not only can they help you save money on your purchases and reduce costs, but they can also enhance your credit score and offer attractive borrowing rates. If managed astutely, a credit card can be a tool to steer your bank account in the right direction. However, it’s critical to exercise responsible use of your card and avoid borrowing beyond what you can reasonably afford. Misuse can tarnish your credit rating and lead to costly debts.
Avoid Making Cash Withdrawals
Cash withdrawals prove to be an expensive affair, attracting immediate interest. The instant cash requirement can turn costly not just at ATMs, but also when purchasing traveler’s checks, currencies, placing bets, and making electronic transfers. Essentially, it’s recommended to avoid withdrawing cash with your credit card.
Despite a few credit cards offering a 0% cash transfer, the majority impose an interest charge if you choose to transfer money from your credit card account to a bank account. Comparison websites can serve as valuable tools to weigh the pros and cons, removing much confusion regarding potential charges.
Track Your Expenditure
Refrain from extravagant spending with your credit card and reserve it preferably for emergency usage. A common practice is to make minor monthly purchases and repay them back promptly to fortify credit rating.
Furthermore, it’s recommended to keep your expenses below 80% of your total credit limit to maintain a safety cushion. It not only provides a safety net for emergencies, but it also makes you a favorable candidate for lenders supplying other financial products.
Stay vigilant with your bills to readily detect fraud or clerical errors. Set up direct debits for your monthly payments for greater convenience. Most credit card companies offer flexible repayment options, allowing you to repay either the entire owed amount, the minimum payment, or any particular amount of your choosing (as long as it exceeds the minimum payment).
Remember, intelligent use of a credit card, guard against unnecessary expenditures, can pave the way to a healthier credit score.
