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Credit insurance is something that most major credit card companies offer... ...more
Let’s face it: no one intends to get way over their heads with credit card debt. Most people get their first credit cards with great intentions – to establish a solid credit history for use later in life. However, over time, charging purchases just becomes a way of life, and soon we struggle with our debt load.
A credit card is not the evil entity that many have pictured it to be. You can use credit cards wisely and benefit substantially from them, but you will have to start thinking before you buy!
Pay Your Bill
The first way to use your credit card more wisely is to start paying your bill, in full, every month. This allows you to benefit from the freedom of charging your purchases as well as any benefits programs offered by your credit card company, without paying the high interest fees common with modern credit cards.
Remember, you are paying at least 14 percent in interest for most credit cards. When you do not pay your bill in full, you are, in effect, taking out a high-interest loan for the purchase. Stop and think about what you bought on your card the last time you used it. Was it socks? A meal at your favourite fast food restaurant? A cup of coffee? Would you really ask your bank to give you a high interest loan for that purchase? By using your credit card and not paying the bill off, you are doing just that.
Set Limits
How many credit cards do you own? If you are struggling with reigning in your spending, limit yourself to one credit card. While you are at it, lower the credit limit slightly so that it is something you can realistically manage, should you have an emergency that forces you to use the entire limit. If you do not have a dozen cards ready for you to use, each with its own due date, penalty system and credit limit, you will have a much easier time staying on top of your debt load and not overspending. Avoid carrying it in your wallet, where you will end up using it for spur-of-the-moment purchases.
Take Advantage of Rewards
One of the main arguments for keeping a credit card available to you is the rewards programs offered by most major credit card programs. As you are choosing the card you are going to use or the one out of your wallet you are going to keep, choose one that has a good rewards program. Then, keep track of the credits you have earned, and be ready to cash them in.
Gift cards used as gifts for the holidays, free airline travel and even a credit on your bill are all possibilities with credit card rewards programs. If you are charging your purchases, but paying off those charges every month, you are earning credit cards rewards points. However, this is a wasted benefit if you do not take advantage of the points you have earned. Also, do not pay fees in order to get a great rewards program, unless it is truly a program you will not find elsewhere for free.
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