Love them or hate them, credit cards are used by millions and millions of people on a day to day basis. If you use them the right way then credit cards have their advantages but you have to be disciplined with the amount your spend on your card and you have to know your repayment strategy.
Successfully managing your credit card starts even before you have had your application accepted. You need to know that your credit card suits your needs; this may depend on the type of credit card or on the various advantages that a particular card offers.
Ask yourself why? Why do you want a credit card and for what use? Do you want one for emergencies or for transferring another credit card balance to avoid paying interest? These are all questions you need to ask yourself before filling out an application form.
When choosing a credit card try not to fill out an application on impulse based on introductory offers. Take your time and read through exactly what the credit card offers, what are its advantages? An example could be 6 months interest free on purchases, but make sure you check what the interest will be after the 6 month period has ended.
Once you have filled out your application and you are using your credit card on a regular basis, you should always make sure you meet your monthly repayments, and if possible do so a week before your payment is due to show that you reliable and trustworthy to your card provider. This may result in you being rewarded with a lower interest rate in the future.
Not meeting a credit card repayment even for just one month can leave you with red markers on your personal credit record, this can make it harder for you the next time you approach a lender for funds.
I like to stick to a simple rule where I never use a credit card unless I have to; if you have cash on you then why would you use your card? It’s so easy to just hand someone your card and enter a pin number, I bet if you had that amount on you in cash you would think harder before making a purchase!
If you do decide to use your credit card for whatever reason, then setting up automated payments can be a huge advantage. Set up automated payments from your bank account so that whenever you have a balance to be paid; it gets paid off without you lifting a finger, this way you’ll never miss a payment.
Being able to manage a credit card successfully on top of all your other financial commitments including your debts and savings can be quite a challenge, it takes organisation and discipline but if used correctly and for the right reasons then a credit card can be quite a good personal finance tool.
This article was written by Andreas, a financial author for Money Supermarket, a UK based comparison site.