You don’t need to cut up your credit cards; you can use them to your advantage and let them work for you.
Many people have become slaves of their credit card debt, their freedom stifled by monthly payments with enormous interest charges on things that they couldn’t really afford in the first place. They can’t get rid of their credit card debt and so it hangs over their head and increases more each week as it puts a permanent stain on their credit rating.
Without money management skills, credit cards can be an easy trap to fall into which can put you in a very bad financial situation.
However, if you are able to master the proper use of your credit card you can be in a situation where you have the power over your credit instead of your debt having the power over you.
Here are a few tips for making your credit cards work for you:
Pay off Your Balance Every Month
It’s very simple. Use your credit cards to buy something only if you can afford it, and as soon as the bill comes in the post or email, pay off every penny right away. Never ever buy anything with your credit card unless you have the cash to pay for it in your savings account. This will help you in a few ways.
First of all, if you can’t pay something off with the money you have right now you will not buy it. Secondly, you will avoid ever being charged interest payments, which are exorbitantly high on credit cards. Thirdly, you will be working to establish a good credit rating which will help you in the future when applying for a mortgage or other loans.
Use a Credit Card with Rewards
One of the advantages to using a credit card rather than cash or debit is that some cards will offer you points, frequent flyer miles, and other rewards. If you use your credit card wisely and never pay interest charges, you will come out ahead with many of these reward schemes. You could end up with free shopping, clothing, appliances, or trips abroad just for paying with your card.
Look into the different options available to see what rewards your credit card could be bringing you.
Another great way that your credit card can work for you is that it can offer you coverage similar to an extended warranty on many of the things that you buy. For example, most of the major cards such as VISA will give you coverage for a minimum of one year for several types of purchases. I once bought a plane ticket to Paris from a budget airline, only to have the airline go bankrupt a few weeks before my flight.
Although the airline did not refund my money, I got the full amount back anyway from the credit card company. If I had paid in debit or cash, I would have lost the money.
If you use your credit card in a smart and careful way, these are a few of the ways that it can work for you to make your life better.