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Use Your Credit Card Sensibly

Aug 17, 2007
A credit card is a wise option if you wish to make frequent purchases and keep a track of your expenses. The facilities could even be used to postpone payments on certain articles, thereby earning more interest on your money. It enables you to shop without carrying large amounts of money, thus eliminating the risk of theft. However, the credit limit on the card should be used sensibly, to avoid a bad credit rating.

Ways to use your card wisely:

Listed below are some tips on how to manage your card sensibly:

Select the right credit card: It is essential to choose a credit card that meets your specific requirement and adds significant value to your monetary assets. You need to shop around and compare cards, before selecting one that offers the best rewards at low interest rates.

Don't buy if you can't afford: Credit cards make provision for you to 'buy now and pay later'. However, you should buy only those articles with the credit card that you are sure to afford paying back, within the time limit allotted. You should be aware that most charge an additional fee and a relatively higher rate of interest on late payments. You need to carefully analyze the pros and cons of the offers, to increase your limit.

Avoid paying extra fees: Banks charge an annual fee on credit cards and so the use of fewer cards would mean less annual charges and minimized interest rates. Before opting for a credit card, you need to compare the benefits offered with the fees charged by the credit card company.

Pay on time: It is important to make a regular monthly payment, without crossing the credit limit. You ought to try and pay more than the minimum amount. The faster you pay, the quicker you minimize your debt on the credit card account. This helps to avoid the extra fees charged and the high interest rates applicable.

Manage debt wisely: It is important to manage your debts in a responsible manner. It would be beneficial to discuss your financial issues, if any, with the company and bank. You could adopt a payment schedule to help manage and curb your debt.

Don't use a credit card for long-term borrowing: Funding long-term borrowing through a credit card is not advisable. This would only increase the rate of interest on your account.

Utilize the interest free period: Most credit cards offer an interest free period. The period could be anything between forty four to fifty five days. You are promised additional interest-free days if you make purchases at the beginning of the month. A comparatively lesser number of interest free days are offered on purchases made at the end of the month. You are expected to pay the entire credit card closing balance within the time limit specified, if you wish to avoid paying interest on your expenses during the interest free days.

Credit cards are a great help to those who wish to avoid paying by cash. However, you need to make use of the facilities offered judiciously.
About the Author
Joseph Kenny writes for CardGuide.co.uk/, visit to compare UK credit cards, and also many 0% balance transfers to transfer your debt to an introductory 0% credit card deal.
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