In the recent times, there would be many households who resort too easily to their credit cards for satisfying their day to day needs in the best way possible. One must be very careful, because excessive credit card use can lead to counterproductive and bring their owners to excessive indebtedness .The following article reviews some of the guidelines for using the credit card in a rational manner.
Credit cars are the only alternative for many people to meet their day to day household requirements, whose regular income is very limited and needs are sky soaring. This practice of majority of cosmopolitans is not totally right. This trend is going to create huge debt blocks for normal income people and make them heavily leveraged. Financially, being heavily leveraged is not at all advisable. Irrational use or disproportionate expenses to their income can cause serious problems in the current account of the owners. The gains made by card are to be paid and also with interest and fees.
We often think that we have fund in abundance when we have credit card, but the reality is totally different. You have funds but nothing comes free. You have to pay interest on the funds used. That interest would range from 7% to 15%, depending on the type of card.
How to Use Credit Card Wisely
To avoid excessive borrowing and to spend rationally, follow these tips.
- Don’t cross the limit of card in any circumstances: As this will generate the payment of fees and overdraft interest claim. Therefore, it is necessary to know your limits. If you are not aware of your credit limits, call the card agent or card issuer and get the details. In any circumstances, don’t exceed the limit and give card issuer a chance to loot you.
- You have to know that this money will have to be replaced in the corresponding deadlines, with an interest rate ranging between 7% and 15% .
- Do not withdraw money from the credit card continuously, it is better to pay in cash or through a debit card. Use your credit card when no other option is available. Credit card is a facilitator, not a tool to spend money.
- Reap its benefits: Sometimes you get benefit for using credit cards especially when booking tourist services (hotels, airline, car rental, pay stubs, etc..). Use these benefits whenever possible both in traditional and online formats.
- Keep constant track of all your expenses incurred from the card. You have to know when are you touching the limits and when to stop.
- Whenever possible, you should opt for other means of payment that do not generate fees or interest rates.
- Keep monthly budget to spend from credit card which doesn’t touch your credit limit and get alarmed as your spending on credit card reached your budgeted threshold.
- Keep a timetable: Fix a date on which you have to go and pay the bill so it doesn’t cause unnecessary delay and you don’t have to pay extra money.
- Don’t advocate credit cards to your children. Credit card is an expense provoking mechanism, once you have it, you feel like spending and that’s where the soul of consumerism lays. Don’t encourage your kids by giving them credit cards.
- Learn from experiences: Every card holder must have had experience of exceeding credit limit or delayed payment in his/her life. Don’t let these experience go waste. Learn from your experience and improve. Be a smart user.
Credit card is a wonderful facility and also a chariot for consumerism. Use this thing wisely and reap the benefits and avoid excessive usage if not necessary. It’s always better to be cashless than being heavily leveraged.