If you want to use a credit card, learning to use it in the right way is absolutely essential. Credit cards are great financial tools as long as they are used with caution, but in order to prevent yourself falling into debt, you will need to develop money management skills alongside discipline and financial knowledge. Below, we have compiled some tips to make sure that you are using your card in the right way.
Choose The Best Deal For You
Think about the reason you want the card. Is it to make purchases on or to transfer other debt to it? Perhaps you have a bad credit score and are hoping to improve it with some savvy credit purchases. There are a range of cards on the market and it is best to look around for the best deal for you. However, make sure you only apply when you are sure as multiple applications can actually make your credit rating worse.
Tips For Using Your Card Correctly
• If using a card to build your credit rating, spend a moderate amount on it each month. Use it for small purchases that you were going to make anyway such as petrol or food and ensure you have the money to pay it off in full each month.
• Using a 0% interest card for a large purchase such as a holiday or electrical goods can be a fantastic idea as you receive more protection on your credit card than you do using your debit card, but make sure that you have a plan to pay this off before the promotional rate ends.
• Using a cashback card for large purchases can also be a great idea as it means you receive money back on every purchase, but once again make sure you have the discipline to pay this off quickly or in full or your savings will be dwarfed by interest fees.
• Using a 0% interest balance transfer card is a great way to avoid paying hefty interest charges on your other cards for a small fee, but make sure you cancel the old card immediately to prevent racking up future debts.
Before You Take The Plunge
Before you decide to commit yourself to a card, ask yourself whether you have the discipline to pay it off regularly to avoid spiralling into debt. If the answer is yes, research the best card for you and apply to receive the great benefits listed above.
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