Credit cards can be an awesome financial tool, but, if used incorrectly, they also become one heck of a trap. If you have bad credit, then you probably have a love/hate relationship with credit cards. You love spending money on them, but you hate having to pay your bill.
If you want to use your credit card in the right way, you don't have to give up your credit card altogether - although if you know that you can easily abuse your credit card, this is not a bad strategy. Instead, take some simple habits that allow you to enjoy the benefits of credit cards - cash flow flexibility and rewards, with two examples - no dangerous disadvantages.Follow your tips to attribute your best friend (not a deadly enemy) to you:
Pay your bills every month.
If you don't want to end up being an "ordinary American," you need to get rid of credit card debt. This means you can only charge what you can afford, and pay your bills in full every month - if it helps you stay ahead, even pay a few times a month.
This can seem challenging, but it's the primary rule of using credit cards instead of letting them use you; it's really the only way to avoid getting stuck in credit card debt, and the only way to avoid paying interest on purchases. (Trust me, you don't want to do this: a 20% price reduction means there is almost nothing after you get hit by 18% of your financial expenses.)
Do not pay your bills late.
In addition to paying your bills in full, you should also ensure that your bills are paid on time. Most issuers charge a late fee of up to $39. And, because 35% of credit scores are based on your payment history, missed payments can really lower your score. At the same time, paying all bills on time is a great way to keep your interest rates low and improve your credit score and overall credit status over time.
If you are worried that you will forget and eventually miss your deadline, please set a reminder on your phone a few days in advance or mark the date on the calendar. Another option is to adjust your online account settings so that your bills are automatically paid by direct bank draft on one day of the month.
Log in to your account.
One reason credit is easier to use and track than cash is that it creates a written record. When you buy all your merchandise with a credit card, you don't have to pay for receipts for items such as groceries and gas. Instead, just log in to your online account and see how much you spent, how much it cost, and how much.
Regular registration - at least once a week - can help you maintain the highest level of spending so that it does not exceed your control. If you notice that you have exceeded the limit of this month's ability to repay, please stop using your credit card immediately until you pay the balance. Checking your account activity can also help you discover any money leaks in your spending. Do you spend more on Starbucks than you think? Most credit cards offer powerful tools on their website to track your spending - use them to gain your edge.
Use your credit card as a supplement to your budget.
If you are disciplined, you can use your credit card as a supplement to your budget. This strategy usually involves creating a written budget and then using your credit card to make a purchase until you reach the predetermined spending limit. This is a great way to earn rewards, no matter what, you will make a purchase and get some protection, only credit is provided.
To keep track of it, make sure you sign in to your account every week or every few days. Seeing your spending on the computer screen - black and white - is sometimes the only way to make money.
Know your limits.
If you are worried that you may overspend, ask your credit card company to lower your credit limit to a level that you know you can manage monthly. They should be very happy to fulfill their obligations, because they ultimately want you to return the money, and they can usually make the change in the credit line effective immediately. Not everyone wants a $10,000, $5,000, or even $3,000 card limit, which doesn't matter.
Another strategy you can try is to use your credit card until you spend a self-defined limit, such as $500, then put your credit card in the drawer until the beginning of next month – or until you pay in full Clear the bill. This can help you keep your budget and your bills while allowing you to maintain a larger credit limit that may be useful in an emergency.
Use your card for big things.
Many people who are stuck in credit card debt complain that credit card debt has sneaked on them for good reason. Sometimes, those small deals of $10 and $20, over time, can start their own lives if they are not controlled. If you want to avoid "a lot of money," consider using your card instead of a big purchase.
The best way to do this is to save the cash first. Then, when you make a large purchase (and get bonus points) with your reward credit card, you will have the funds to pay immediately. Another option is to use your card for a major purchase and then pay off within a few months with a strict schedule - knowing that you will pay a little interest to enjoy the luxury of decentralized payments. (That is, unless you can take advantage of the introductory offer on April 0.)
When you go this route, start with a plan. For example, if you plan to buy a new washing machine and dryer for $1,200 and then pay it out within three months, make sure you are ready to pay $400 per month for three consecutive months (plus some interest). It is also helpful not to use your credit card for other purchases until you have paid the full price of the washing machine and dryer. You don't want this balance to plague you for a few months after you think it's history.
Take advantage of all the rewards you can get.
The person who can best benefit from credit cards is the one who masters the art of credit card rewards. The best reward credit cards offer a range of benefits, including cash back, hotel credits and frequent flyer miles, which can be earned by using your credit card to pay for your daily expenses (such as grocery or wire transfer bills).
Of course, when you pay interest on the purchase, the credit card rewards will be much lower because you have a balance. To avoid this kind of mistake, you can only pursue credit card rewards if you know that you can pay your balance in full. If you are not sure about this, then these rewards may not be worth it.
Choose a card with an extra discount.
Even if you are not interested in credit card rewards, you can still take advantage of the credit card. For example, some of the best credit cards offer additional benefits such as free travel insurance, primary and secondary car insurance, price protection and extended warranty. If you pay your card in full every month, you can enjoy all of these offers for free.
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You see an irresistible credit card offer - tens of thousands of points or miles are easily worth a plane ticket or short-term hotel stay. You seized the opportunity, won the registration score, and enjoyed it.