Friday, August 26, 2011

How to Use Your Credit Card Wisely

Use of Credit Card 
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A lot of people are having problem how to manage their credit card, especially in today's economy. Credit cards are very useful and very convenient in today's era. It can help us out during unwanted situation, like when you ran out of cash in a grocery; instead of going out to withdraw money at an ATM (Automated Teller Machine) just use your credit card. You can also use it in your hospital bill, fast food chain, buying a gadget and a lot more. But the thing is we need to learn to use them correctly to avoid ourselves from drowning in debt. 

 
Temptation of using Credit card  

Credit cards shall only be used to buy necessities and shall not be tempted to buy things that are out of your budget. I've seen a lot of new credit card users are having fun using their credit card for a reason that he or she has a big amount of credit limit, but end up struggling to pay their debt. Nevertheless, with some discipline and determination, we can avoid and control the temptation of using your credit card unwisely. The following tips are based on my experience and other peoples experience, it will help you learn to manage and take advantage of your credit cards. You can follow these tips and protect yourself from drowning to debt.

 Tips on How to Use Your Credit Card 

1)      Don't use more than 25-30% of your available credit line. Always keep in mind that your card is like real cash and budget that amount.

2)       Make it a habit to check your balance often. Every time your statement arrives, go ahead and double-check it. Be sure that there is no unknown purchase in your statement. If this happens report it immediately to your credit card provider.

   Take time to read your contract and make sure that there are no added services or features that may be charged to you.

4)       Prevent yourself not to go over your credit limit. If this happens, you will be out of control of your finances.

5)       Don't throw away your credit card receipts of your purchases. In this way you can easily prove that there is an error in your statement, if you've been overcharged.

6)       Take advantage of the promos and freebies that your provider offers. Like if you purchase a certain amount using your credit card you get a free coffee or burger. 

7)      Always pay the full amount that you used every month, think that you are just borrowing money that needs to be paid immediately. Don't borrow money more than you can afford or else, it will lead you to the credit card debt pit. In this way you can also avoid paying interest rates of your unpaid bills.


8)       Don't use another credit card to pay off another one. It is a bad move; you are putting yourself into trouble. Don't make a loan to pay your credit card, for me it is just the same thing. If your salary is not enough to pay your debt; the best thing to do is to look for an added source of income or sideline to have extra money to pay that debt.
      
9) Also ask your provider to waive the annual fee of your credit card, a lot of credit card users don't know that annual fee can be reversed (For Philippines only, I am not sure in other country). Some credit card providers instantly grant the request and some require you to avail one of their products or services before approving your reversal request, this is much better than paying charges getting nothing.

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