How to be smart with your credit card

Jul 14, 2020
credit cards
By Staff writer

 Having a credit card to use is excellent, especially when you never know what financial challenges you may have. You can buy things that you need now but can’t pay for up front, you can make an investment that will help you later on, or you can overcome difficult times by putting things on your credit card. 

Although problems arise when people use their credit cards more than what they need, and they don’t take into consideration how much they will have to pay once the interest adds up. 

How to use your credit card wisely? 


Why do people struggle with credit cards?

Many people struggle to pay off their credit cards, and somehow they slowly fall into more debt. This is not the fault of the credit card themselves, obviously, but the spending habits that most people develop when they use credit cards instead of cash.

It is easy to overlook the real price of a product when you pay with a credit card. You swipe the card, and no amount seems to be too high, thinking that you will have the chance to pay it back later. Even more so, most people tend to buy things that are not entirely necessary, simply because they can pay them off later. 

However, it is easy to fall into debt since most of the credit cards have a significant interest. When the holder fails to pay the agreed monthly amount, even more, interest adds up. In the meantime, the credit card is used for other purchases, and the debt gets bigger and bigger.


Learn to be smart with your credit card

Being smart with your credit card doesn’t mean you have to miss out on any of the benefits of having a credit card. It just involves doing certain things that will allow you to use your credit card without the guilt of your debt piling up. There are many simple tips and tricks that you can use to keep yourself debt free and gain the advantages of your credit card. From spending wisely to putting a limit on your purchases and making a credit card comparison, all these will help you save a lot of money in the long term. 


Set a limit on what you can spend

Most companies give you this option; you can set a limit on your credit card, and you won’t be allowed to cross it unless you call the bank and make some adjustments. Although, in theory, you still have access to the same amount of money, the chances are that you won’t go through the trouble to call the bank and lift the limit – all for buying something that you don’t need.


Only use the credit card when you need it

Impulse buying, shopping for a new pair of pants (although you don’t need them) or paying for a spontaneous trip across Europe doesn’t count as ‘necessary’ items. You need to replace your phone because your old one broke? You can use your credit card. Is there an emergency and you don’t have enough cash? You might as well put it on your credit card


Don’t carry your credit card with you at all times

If you do this, you will be tempted to buy anything, and everything that you see and love. But if you have to go back home and bring your credit card to purchase an item, you will think ten times more if you need it and if it’s worth all this effort. 


Keep in touch with your credit card bank

You want to make sure that you don’t spend more than what you can afford to pay. Ask them to send you a statement every single month on actual paper. I strongly recommend this because it is easy to ignore an e-mail, but not as easy to overlook a letter.

Check your statement and see how long it will take you to pay for your debt; if the amount is enormous already, you may want to stop yourself from unnecessary spending for a while.


Negotiate a lower interest rate

You can do this with most companies, especially if you are a loyal customer and you’ve been their customer for a long time. It may not seem like 1% is a big difference, but it all adds up and you will be surprised how much money you can save in the long run. 


Pay off your debt before making any purchase

Most of the people in the world are in debt, and they don’t even realise it. If you need to pay your credit cards off ultimately before making a new purchase, you should probably be more careful with what you buy. However, banks are thrilled when clients add even more interest to their accounts, and clients are happy in a world where material possessions are so valuable.

The best thing to do to keep yourself away from a financial disaster - is to pay off all your debt before making any other unnecessary purchases. Yes, it does sound extreme, but it is also proof of financial discipline and a smart thing to do.


Use cash as often as you can

This is a great way to save money, especially if you notice that you are impulse buying more than you should. Instead of putting the purchases on your credit card, force yourself to use cash. It makes you more aware of your spending habits and the price you are paying for a particular item. When you don’t see or touch the money, you don’t realise how much you spend and how fast you do it.


Get started with a credit card now.

Banks are not harmful, and credit cards can be beneficial if you use them wisely. Make sure you don’t purchase things that you don’t need and keep your debt under control, to keep your finances in check. You can see if apple credit cards are suitable for your needs, or you can check Westpac Bank, Kiwi Bank or ASB bank as they have great offers for credit cards.

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