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Using Your Credit Card Wisely

Aug 17, 2007
Although credit cards can be an invaluable financial asset, unless you use them wisely you will find yourself drowning in debt. However, if you use your credit card wisely then you can save yourself money and be able to purchase the items that you could not afford in one lump sum on your current wages. Here are some tips about how to use your credit card wisely.

Building a credit history

One of the best ways to use your credit card wisely is to use your card to build up your credit history. People who borrow and pay back the money responsibly have a much better credit history than those who never borrow at all. If you spend money on your credit card and then pay it back quickly, you will be seen as a good borrower and you will get better deals on other financial products like loans and mortgages.

Paying off your balance

Another sensible way to use your credit card is to only charge to your card what you can afford to pay back each month. Although this is not always possible because of large purchases or unexpected expenditures, you should generally try to budget to pay all or most of your balance back each month. If you can pay back your balance in full each month then you won't be subject to the high interest rates of your card. However, even if you can't pay back the whole amount, make sure you pay back more than the minimum payment. Paying only the minimum will leave you wasting money on interest and your balance will a lot longer to pay off.

Keeping cards at home

If you are having trouble with your credit card spending, then a good way to avoid the temptation is to leave your credit cards at home unless you really will need them. If you are simply going out on a small shopping trip, leave your cards at home so that you won't be tempted to buy anything extra. Only take your credit cards out when you really need them, or in case of emergency.

Balance transfers

If you find that your credit card interest payments are very high, then a good way to reduce this is to switch your balance to a card that has 0% interest on balance transfers for a certain period of time. This will mean that you can pay off the balance without having to worry about interest for the next few months.

Shopping online

Shopping online has become increasingly popular, mainly because of the convenience it offers and the low prices available. When shopping online it is important to always use a credit card to purchase items. This is because credit cards are much safer than other forms of payment, and offer purchase protection. This means that if something should go wrong with the sale, you have the ability to claim the money back from the credit card company. If you use your credit card wisely, then you will avoid getting heavily into debt and will have the freedom that using a credit card can afford you.
About the Author
Peter Kenny is a writer for creditcards-gb.co.uk Please visit us at Credit Cards UK and 0% Credit Cards
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