5 Tips on How to Manage Your Credit Card Wisely
If an event as big as the COVID-19 outbreak were to happen again, how ready would you be? Most New Zealanders rely on their credit cards to make online and offline transactions. Even for stores in rural communities, swiping a credit card is one of the easiest options to pay for goods and services. Withdrawing money from your credit card is not a good option either, as there are few ATMs that exist outside urban areas. Sure, paying with credit cards is a quick and easy option … but it is still a debt unpaid! During calamities like a pandemic, it’s the last thing you want to worry about. If you own a credit card, it’s important to manage your spending wisely. Here are a few tips that Glimp has to help you manage your credit card better.
1. Don’t pay your credit card with another!
While you can technically pay for one credit card by transferring funds from another, is it really worth it? It’s like paying off your debt with more debt! One way to avoid this trap is – don’t get another credit card if you don’t have the need to. Stick with one account that you know you can pay; so in cases of emergency, you won’t have the difficulty of deciding which to off.
2. Close your unused accounts strategically
Some finance experts would tell you to leave your old and unused credit card open for a good credit score. This is true, but only if it’s not charging you any annual fees; which some banks will. If keeping an account open only adds to your expenses, it’s not worth it for the credit score. Plus, if the account has a rather low spending limit and there is no debt in it, you’re better off to just close it. If you don’t really need it, why have it, right?
3. Pay your debt before making another purchase
By becoming a bit more disciplined, you can pay off your debts faster. You can do this by paying off all your debts first before using your credit card again for more purchases. Will it be hard to do? Most likely, but it will take you a long way in clearing your debt. Getting your hands on that latest smartphone or designer shoes is tempting for sure. However, imagine if a disaster hit, those purchases won’t be high on the priority list. Rather, it’s the necessities such as food, water, and clothes.
4. Be smart by paying credit card on time
Fees stack up over time, and you can see these once you receive your credit card statement. You’ll be shocked to see just how much late and interest fees cost when you delay your payment. Aside from this, late payment can also affect your credit score, rewards points, or worse, your credit card being defaulted! You can use a series of methods to make smart payments to ensure you pay on time, like automatic payments and scheduling. Just make sure you pay at least the minimum amount you owe.
5. Use credit card perks and incentives
If you want to utilise your credit card to the fullest, use those perks and incentives! You can have that guilt-free overseas trip, knowing that you pay your debts regularly. You can also use these perks to purchase any necessities you may need during calamities. Perhaps, you can also indulge a little while remaining safe by buying that new washing machine or stove you’ve been needing to replace for so long. Calamities like this pandemic have taught us many things, and one of those is becoming wiser with your spending. As cash flow is tight, make sure to use your resources like a credit card to its full potential. It’s also worth taking some time to review the credit card provider you’re with - it might be worth switching to a new one! If you’re considering switching to a new provider, use our online comparison services. We can help you find the best credit card provider to match your needs – and wants here at Glimp!