We are ready to share with you the essential tips on how to use a credit card in a smart way
Nowadays the credit card is an integral part of a consumer’s life and the financial system as a whole. It is such a handy way to pay for the goods and services, isn’t it? However, sometimes users face abnormal fees, which are mostly attributed to convenience and maintenance. This article tells you some life hacks that will help you to avoid large fees.
Every transaction must be written down
If you don’t track your expenditure, now is probably the best time to start. If you are already familiar with this life hack/advice – keep tracking your expenses, it is an appropriate way to stay aware of your financial situation.
Always pay on time
Paying a credit card bill on time is, to put it mildly, a good habit. Otherwise, you will always pay extra interest fees.
On the subject of credit cards, try not to withdraw cash. It is the 21st century, and difficult to find a sales-point which doesn’t accept cashless payments. Nevertheless, there are still some situations where you’d need to have cash. If you know you’d undoubtedly face at least one of these situations, it is better for you to find other options (other bank cards, borrow a little money from your friends, etc). Withdrawing cash means paying extra fees.
The larger the credit card repayments – the fewer interest fees you will pay in future
The title is quite self-explanatory. Of course, it is not always possible, but there are no excuses for those who don’t even try to make more than the minimum repayment for a credit card bill. As we’ve mentioned above: the larger the repayments you make – the less extra fees you will pay.
Don’t set an unreasonable credit limit
It’s easy – don’t set more than you wouldn’t be able to repay. You will agree that spending more than you can afford is a bad idea.
If you can’t afford to pay off your balance each month, don’t increase your credit limit. A higher credit limit makes it too easy to get into more debt.
Reduce a credit limit
Credit providers usually try to convince you to increase your credit limit, it is part of their job. Since they are not allowed to do it directly and openly (sending of invitations, calls, chats online, etc), their ways to implement this become more and more sophisticated. Your goal is to determine the credit limit that is convenient for you (depending on your income), and, consequently, set it. Thus, if you figured out that you have a rather big one, ask a credit provider to reduce it.
In the case you need to buy something special/costly, remember:
You can ask your card issuer for an increase to your credit limit at any time.
But let’s not forget that the only way to pay the minimum in fees or interest is to repay the debt as soon as possible. Before increasing a credit limit ensure the amount is manageable for you.
Credit is a means of last resort
Everybody faces bad days. No one is safe from money troubles. So, even if you are feeling the pinch, remember, credit or loans are not the answer. They are not the best solution, especially in the long term being one of those solutions that might help solve an immediate crisis situation straight away, but it only works in the short term.
Tempting store cards
Sometimes store cards seem to be so seductive, especially if you are an avid shopper and you prefer to shop at one specific point of sale. Buying goods with this card you automatically earn discount or rewards points, or it moves you one step closer to premium/exclusive/special offers. However, you should remember that these cards often have their traps and pitfalls, like extra fees, a higher interest rate, etc. Always check the terms and conditions thoroughly before signing up for any kind of store card. Frequently people chasing for savings miss hidden fees and interest rates, and their savings store cards turn into unprofitable, even loss-making ones.
Don’t neglect to check the credit card statement
One of the best ways to implement this is not to throw all your bank card receipts and check them monthly.
Even if you don’t keep your receipts, here are some things you should look for when checking your credit card statement:
- Charges by companies you do not recognize
- Large or unusual charges
- Changes in direct debit amounts
- Duplicate charges
Always double-check whether your card is closed properly or not
If you decided to close a credit card, implement it properly by contacting your credit card provider. Cutting up a card and throwing it away is definitely not the best way to close a credit card account since physically getting rid of it is not enough.