I’m sure you’ve heard the stories about credit cards, about how they’re bad news and you’ll simply get yourself into debt. Well yes, if you don’t handle them correctly then you are a fast track road to financial trouble, but they can be equally as useful too, it’s all about handling them in the right way.
If you need to make a big purchase, perhaps something for the house that has broken, a washing machine for example, then you’re not likely to have the cash at your disposal there and then, so a credit card is of course your life-line in this case.
How can you manage a credit card, taking advantage of the plus points of having one at your disposal, without getting yourself into a debt-related mess?
It’s not as hard as you might think.
Clear the balance
The problem with credit cards is that you pay a lot of interest for purchases, and you don’t simply pay the price of the item you used the card to buy – unless of course you clear the balance before the interest goes on. Clear your balance at the end of every month and you won’t be at the mercy of excessive interest charges, you’ll stay debt-free, and you will build up your credit rating as a result.
Don’t draw money off it
This is probably the biggest pitfall of them all where credit card debt is concerned. Using your card to draw money off it is always going to cost you a lot more, because the interest on cash withdrawals is higher than purchases, plus it does nothing for your credit rating score either. Stick to purchases, which have a lower interest rate.
Look for balance transfers
If you do have a balance on your card, regularly look for balance transfer offers and take advantage of them. These offers often have a 0% interest rate for a certain length of time, and this means you’re eating into the balance with your monthly repayments, rather than just chipping away at the interest which has been piled on. Aim to get your balance clear by the time the 0% interest period is up.
Check offers regularly
Credit card companies are now in competition with each other, so of course there are going to be regular offers which could help you out. Check them regularly, do price comparison searches on websites to find the best offers, and check whether moving a few things around could help you lower your existing balance.
Be strict with yourself
Finally, and perhaps most importantly, remember that your credit card isn’t a quick way out of trouble, and it’s not a quick way to buy something simply because you fancy it – you have to pay it back! Be strict with yourself and don’t give in to the urge to go shopping with that plastic on a Saturday afternoon. Credit card debt is one of the hardest forms of debt to get out of, so trying to stay out of it in the first place is the best course of action.
