In today’s society, credit cards are a part of our life. It can be very difficult to live completely without credit cards, but it can also be very expensive to live with credit cards. If you use credit cards in a healthy way, however, they can be very useful.
The thing about credit cards is that the expenses in using them are very high. The interest you are charged is most likely much higher than the interest rate you can borrow at from other financial institutions, they charge a high yearly or monthly fee for just having the card and, if you charge cash to your card, you have to pay a fee again. On top of this, it makes it almost too easy to buy on credit, thereby increasing your expenses to more than what is good for you.
But there are also advantages to having a credit card. It makes it a lot easier to purchase the things you need, since you don’t have to carry a lot of cash and don’t have to go to the bank very often. Your credit score will be positively affected if you use the credit card right. If you travel abroad, it is also a lot easier, since you don’t have to exchange for the local currency, but can use your credit card instead.
The important part for you is to use the advantages of the credit card and limit the disadvantages for using it. Here are the actions I suggest you take to achieve this.
1. Always pay back the complete outstanding balance on your credit card every month. It limits the amount of the high interest you are paying for the credit provided by the credit card company. If you already have an accumulated credit card debt, take steps to repay it as soon as possible.
2. Accept only one credit card. This will make sure you don’t get too tempted by the extra credit as well as reduce the monthly or yearly fee you pay. Of course you should choose the cheapest option of the credit cards you are offered, unless you have a very good reason not to.
3. Reduce the transactions you have to pay extra fees for. This is usually to withdraw cash. If you do need cash, go to the bank or make larger withdrawals of cash so you can last longer without making another withdrawal where you have to pay a fee.
4. Consider only carrying the credit card with you when you know you will need it. This will also reduce the number of impulse purchases you make. You will have time to consider if you really need the item before buying.
These are the main issues to consider when you use credit cards and if you take action to implement them in your life you will have taken an important step towards healthy personal finances.
By: Brian Ullitz