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Managing that credit card

Sunday, November 12, 2017
Beyond Payday

Understand your financial lifestyle

The best way to manage credit cards is to be intimately aware of your financial lifestyle: that is, your needs versus your wants. Most people who run in to credit card trouble often end up confusing the two.

Understanding how your money comes in, and how it goes out, is essential to determining the role a credit card will play in your life. If you find yourself constantly relying on your credit card simply to make it through the month then perhaps it’s time to reassess other areas of your lifestyle. A credit card should be used to supplement your lifestyle, not sustain them.

Pay of all balances on time and in full

Since a credit card is essentially a loan, the faster you can pay of your balance, the less that loan will cost. Credit card debt typically constitutes one of the highest interest burdens an individual can be saddled with, and as such, paying all balances in full completely eliminates such charges. Additionally, by paying your credit card on time, you avoid late fees, improve your credit score, and keep your credit card in good standing.

Maximise rewards

Most credit cards offer users rewards in some form or another. These rewards can range anywhere from a “cash back” benefit, or “miles” on international travel. Once these rewards are available, they should be utilised fully. So while it wouldn’t be wise to spend money just to get a reward, it would also be unwise to allow any existing reward to lie dormant. Bottom line: once rewards are accrued, use them.

Watch that limit

Most credit cards have predetermined limits and it’s important to stay well clear of them. Charging more than your credit card limit could result in over-the-limit fees, a decrease in your credit limit, or other penalties imposed by the card provider. All told this increases the cost of possessing a credit card.

You’re the one in control

Like any other business, companies that offer credit cards are out to make money. While there’s nothing wrong with that, those who hold credit cards should always remember this fact so as to not find themselves in a disadvantageous position. Ultimately, the extent to which credit cards help or hurt is within your power to control.



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