You get a letter in the post and the return address is unfamiliar, you open it and it says: “Congratulations you qualify for a credit card!” You now get all excited and start picturing that holiday in Paris with your designer dress/suit and your new couch and your new flat screen TV etc. This all sounds amazing to you but there should be loud screeching breaks in your mind. Yes get that credit card but as the saying goes with great power comes great responsibility. That card could give you great power but when used unwisely could ruin you. This article will help you, with some useful tips on how to budget and keep your finances in order.
Firstly, never spend more than you can afford, it is a wise decision and mental note to use your credit card as if it were cash because no matter how much you charge to your card, you will still have to pay back every cent with additional charges. Use your credit card for emergency purchases too. If you have run out of cash then using your credit card can be a viable option, providing you can afford it and it’s not a large purchase. Make your weekly purchases on your general use credit card, from filling up your car to the groceries. Keep track of all your purchases so you know exactly how much money you are using on the card. Always put money away every month from your paycheck for your credit card. When it comes time to pay your credit card, immediately pay for the full amount, this not only avoids financial charges but it also allows you to earn interest on the money for the full month that you kept it in your bank account prior to making the payment.
If you use your card conscientiously within your financial bounds you won’t have that guilty feeling every time you buy something. This allows you to enjoy your credit cards. It’s almost like when you were in primary school you’d get a golden star for your hard work well the credit card institutions give you a “gold star” by giving you rewards for paying your card in full and on time. Not only do you get rewarded you also get recognized in the sense that your account recognizes that you have a bit of money in there therefore earning you some interest before payment.
All credit card institutions issue you with a credit limit; most people see this as their money and the amount of money they can spend every month not realizing that is in fact the banks money and it should rather be treated as a short-term loan and that whatever you use you have to repay that amount at the end of the month. This advice should be considered as if you let the balance roll over to the next month, you will be letting the interest pile up resulting in that credit limit you maxed out to be a lot higher than you anticipated when originally paying it back. Select one that offers rewards, cash back or other features that you can benefit from.
Making wise and informed choices is the best way of preventing financial debt. Creating a budget and sticking to it, repaying the credit card balance every month and never spending more than you can afford in cash should always be considered.
