Finance

Using credit cards wisely

In the present times when credit cards offer us great flexibility in terms of buy-now-pay-later schemes, it is extremely important that you use your credit card wisely. Here are some ways to ensure that using credit cards works for you instead of against you.

Just because you have a line of credit, does not mean that you spend indiscriminately. It is extremely important to keep careful track of what you spend and ensure that you aren’t making purchases that exceed your available income.

From the time you swipe your card till you make your payment, credit card companies give you between 30 and 45 days. However, it is vital that you pay all outstanding dues on or before the date specified so as to not incur interest and penalties on late payments or defaulted payments. Defaulting on payments can also adversely affect your credit score.

Although your card statement will tell you the minimum amount due, it is not advisable to keep paying on this minimum due as you will be levied heavy interest on the unpaid amount still outstanding, a sum that will only compound month on month, possibly running you deeper into debt. If making the monthly payment is difficult, you could negotiate with your card issuing bank to offer you a lower monthly interest rate so that you can make larger payments whenever possible.

When setting a credit limit, do not be lured into setting credit limits that are very high and that might cause you to spend far more than you can actually afford to.

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