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Do’s And Don’ts To Manage Your Credit Cards

Credit card is basically one of the most commonly used financial tool in the world, because almost everyone has at least one or two. Credit card can actually be people’s best friends, and at the same time, their worst enemy. To a child, it is like a magic card, because that is all you need in order for you to buy whatever your heart desires. If you don’t know how to use the right way, it can be pretty dangerous since it is like borrowing money to pay for your shoppings spree, without exactly having enough to pay for it. So here are a couple of do’s and don’ts when it comes to using your favorite financial tool.

DO’s

PAY FOR IT ON TIME

Credit card is technically debt, so it is ideal to actually pay for it on time, all the time. This is to keep you on track of your credit card payments, and if you think that paying for the minimum amount required is a good a idea, well think again, because interest and penalty charges will eventually pile up, and the penalty charges may actually cost more than the actual principle. Keep in mind that when you pay for it after the cutoff time, it will be considered late and your creditor will then charge a late fee, that is why on your next billing statement, will have an additional fee into it for the missed or late payments.

Your credit card score may actually drop, which will definitely affect your ability to get a new credit card in the future if you’re planning for it, because then the payment history is 35 percent of the credit score, and you, paying usually late will affect it badly.

OWN ONE OR TWO

There are actually no worries if you want to own as many credit cards as you want, as long as you pay for all of them on time. However, if you know that you won’t be able to handle it, then it is best to stick to one or two only, it is good enough to have a nice credit score. With only one or two credit cards, you will be able to control yourself and discipline yourself more since you will be cautious of the limits of the credit cards, if you have a lot, there are chances that you might not be able to keep track on your purchases.

KEEP A RECORD OF PURCHASES

By keeping track of the purchases with the use of your credit card, you will be able to monitor your charges as well as your limitations. It would also help you to remember these things so that you wouldn’t be surprised when the bill comes in case you forget that you actually purchased a specific item. It will also allow you to set aside some money to pay for your credit card bill and it will keep you from spending money on unnecessary stuff.

DON’Ts

DON’T LEND IT TO SOMEONE ELSE

One of the worst things to do on your credit card is to let anyone borrow it. It actually doesn’t matter if it is your child, your parents, your spouse. Unless of course, you’re a millionaire who doesn’t really mind other people having a shopping spree with your credit card.

NO CASH ADVANCES

Cash advances is a big NO when it comes to credit cards. This is because cash advance would, unfortunately, lead to higher interest rate, not just on your advance account, but also on your transaction fees.

Also, it doesn’t have a grace period, and that would mean, that from the moment you have gotten your cash advance, the interest would then begin.

LIVE WITHIN YOUR MEANS

Last, but probably the most important thing to remember when it comes to credit cards, is that you must live within your means. If you know that it will be difficult for you to pay for a certain item, that you don’t really need, then what’s the point of getting it in the first place? It is like fooling yourself, because overspending is never a good thing, and you know it. Credit cards are just a tool for you to use so that you could buy something that you could pay for later on.

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