Credit cards provide an important source of financial aid to many people in modern society. Used properly, they can alleviate much of the financial strain placed upon families and individuals and are an effective way of organising your finances. However, there are a number of important rules, tips and tricks that ensure you use your credit card safely and effectively.
1. Research the different types of credit card
Knowing which types of bad credit cards are available on the market is an important step in acquiring a credit card. Each card will be aimed at a different section of society, whether it’s students, retirees or low or high income earners, and will have varying terms attached accordingly.
It is important to put in the time and research to explore the options open to you and find the credit card that fits your particular situation. The terms and conditions of a particular card should suit your needs. If you’re looking for your first credit card this is especially true, as it may prove more difficult to be accepted without a history of responsible borrowing.
2. Maintain your financial records
Keeping your bank and credit card statements organised safely and effectively is vital to ensuring responsible use of your credit card. You never know when you may be required to check the details of your accounts or be requested to provide such information. A record of all your accounts and cards will make this both quicker and easier.
3. Avoid unnecessary fees
Most fees attributed to credit cards can be avoided by taking careful note of the terms and conditions of your contract and planning around those. Avoiding late fees can be achieved by budgeting; this will ensure your ability to make payments on time.
Some fees may be unavoidable, but these are part of the informed choice you should make when applying for credit cards. It is important to take these into consideration and plan ahead for their payment.
4. Always attempt to pay your balance off each month
By paying off the minimum amount each month, you can save yourself from various fees. Those who choose to pay off their balance in full each month can also reduce the risk of exceeding their credit limit, thus reducing the chance that they will incur fees associated with this.
Some cards will reward you for your continued efforts to pay off your monthly balance. This may be in the form of loyalty points or air miles, and provide a welcome reward for responsible credit card use.
5. Leave the card at home
Having the little voice of temptation in your purse or wallet makes it much easier to overspend. If you don’t carry the card with you, there is less chance that you will put make unnecessary purchases. Of course there may be times when you need to use your card, but by not carrying it around, you will be making considered decisions rather than acting on the spur of the moment.
6. Use only in case of emergency
If you have no money in the bank, it’s OK to use your card as an emergency fund. However, this means using it to pay for urgent expenditure that you cannot afford and desperately need – like a new boiler or getting your car through the MOT. It’s not there to buy a new pair of shoes!
7. Use a card with a 0% interest rate
If you have great credit, try and only use a card which offers a 0% interest rate. In the current economic climate these are only being offered to borrowers with a whiter than white record so if you get declined, you are in good company. Just remember that even though there is no interest, you still have to pay the money back so it’s not free rein to go wild.
8. Don’t breach the credit card terms
If you are lucky enough to qualify for either a 0% or reduced rate of interest, don’t breach the terms. This will cancel out the special rates immediately. And when the introductory period expires, look around for another lender offering a competitive deal and cut your current card up; rates often jump exorbitantly afterwards.
9. Look for a card that offers benefits
Although you should keep spending on your card to a minimum, if you do have to use it and don’t have a 0% interest option, a reward or cash-back card may offer an alternative. Spending on a credit card is rarely a good idea but if you have to do it, at least earn yourself some cash or benefits at the same time.
10. Ask someone you trust to keep hold of your card
If you know you will struggle to be disciplined with yourself, ask either your partner or a trusted friend to look after the card and grill you if you ask for it. The idea of facing an inquisition might be enough to deter you from binging unnecessarily.
Remember that one of the main benefits of credit cards is that they protect your purchases – and this means they are the perfect form of payment when booking holidays or paying for expensive electrical items.
