We are all in dire need of credit card advice. If you take a look at the current credit card debt situation in the country, you’ll know that this is true. According to reports, 120 million Americans currently have credit card debt. That’s a lot of people who are currently struggling with debt. And what’s dangerous here is the fact that these cards have a high-interest rate. The longer it takes for you to pay it off, the more you’ll end up paying – specifically when it comes to the interest amount.
Now it’s important to be clear here. There’s nothing wrong with using credit cards for purchases. It does have a lot of benefits. The first is convenience. There’s no need to carry cash around anymore. It can also give you an extra layer of protection. You also get to enjoy freebies and cash-back rewards. Not to mention the fact that having a card will help you maintain a good credit score. You’ll miss out on all of these if you don’t use your credit card.
Unfortunately, while credit cards can be a big help in improving your finances, it can be very tempting to abuse their use.
The key to enjoy the use of credit cards and not put your finances in danger is to learn how to use them properly. And where else can you get the best credit card advice but from the experts?
4 credit card advice you should listen to
If you really want to learn how to use your credit cards properly, you have to learn from the experts. They have the knowledge and experience to help you understand the effects of using too much credit. With the knowledge they’ll impart to you, there’s no need to worry about how credit cards can affect your life. You can confidently use it and make decisions about it.
Knowledge and the right habits will allow you to use your cards without compromising your finances. To have that, take a look at the common credit card advice that experts provide consumers.
Know what you can afford
It’s always a good idea to understand your current financial situation. Unless you know if you can afford the debt payments, you shouldn’t be reckless in using credit. You can only use it if you are certain that you can afford to pay it all back. Otherwise, it’ll only accumulate until it reaches an amount that’s impossible for you to pay off.
Don’t put yourself in that situation. It will lead to a lot of problems for you. The best way to know what you can afford is to have a budget plan. This plan gives you a clear overview of your financial situation. It tells you the income you’re earning and the various expenses that you spend each month. With this information, you can easily determine if you can afford to use your credit card for a specific purchase. You can also use this to set a limit on how much credit card spending you can have each month. It should keep you from overspending.
Monitor your credit score
The next credit card advice that you should consider is monitoring your credit score. Sometimes, people get in trouble with debt, not because of overspending. But because they became victims of identity theft. People had their information stolen and it’s maliciously used to borrow under their name. When this happens, it can really destroy your credit reputation.
Unfortunately, there’s no way to check if you’ve been a victim of identity theft or fraud. You’ll just find out when it’s too late. But you’re not completely helpless. The best thing you can do is to monitor your credit score. You can get three free credit reports a year. One from each of the major credit bureaus. Use this to check if there are unauthorized entries in your credit report. If there are, make sure you report it immediately. The earlier you spot it, the fewer chances that it’ll destroy your finances.
Pay your bills on time
Another credit card advice that experts want you to follow involves your bills. You have to make sure you pay your bills on time. If there’s one habit that’ll make your debt problems worse, it’s your inability to meet your credit obligations on time.
For one, this can lead to additional payments for you. Credit card companies impose penalties and additional fees for those who miss their due date. This penalty will be added to your balance. That means the finance charge will rise for that month. And it’ll keep increasing as long as you keep missing your due date.
Your inability to pay bills can also affect your credit score. Payment behavior makes up a huge part of your credit score. So if you mess up your monthly payments, that’ll reflect badly in your credit report. When you calculate your credit score, it’ll be lower than before.
To make sure you pay your bills on time, use your budget plan. Set up reminders. If you want, you can set up an autopayment feature. That way, you are sure that your monthly payments will always be met.
Lower your interest payments
Finally, you have to find a way to lower your interest payments. This is credit card advice that most people ignore – maybe because they don’t know how to do it.
One option that you can use is to pay your balance in full within the grace period. Every time you carry over a balance to the next billing cycle, you end up paying a finance charge. This is calculated using your current balance and interest rate. The more you owe and the higher the interest rate, the higher the finance charge that’ll be added to your balance. So to avoid all of that, just pay your balance in full before the due date.
Another way to do that is to negotiate with your creditors. You can find a lot of expert advice about how to do this. It’s not that complicated. Just give your creditor a call and ask them to consider giving you a lower rate. You can also consider consolidating your debts. There are many ways to consolidate so it ends up with a lower rate.
Why you need to follow the right credit card advice
Since we really can’t eliminate the use of credit cards in our lives, we have no choice but to go for the next best thing. Listen to the credit card advice from the experts and follow it.
To avoid the debt trap
Let’s face it. We can’t live without using our credit cards. In fact, when disaster strikes, families fall back on using their credit cards for necessary purchases. It’s not entirely bad – but only if you don’t know how to use credit properly.
So if there’s a chance that you’ll rely on your credit card for emergencies, make sure you know the limit so you won’t abuse it.
To manage the temptation
Credit cards can be a huge temptation. It really feels like an extension of your wallet. So if you don’t know any better, you’ll end up maxing it out when you buy stuff that you don’t really need.
Don’t give in to the temptation. Always remember that even if it’s your name on the credit card, it’s not your money. You have to pay that back – most likely with interest.
To save your financial future
The last reason to listen to credit card advice from experts is to save your financial future. If you let yourself fall into a debt trap, it’ll be very hard to get out of it. For sure, it’s not impossible. But why go through all that if you can avoid it? Just learn how to use your credit cards properly and your financial future will be safe and secure.