Taking out a credit card is something that many of us as adults need to do. They are incredibly useful tools, but you do need to make sure that you manage them in just the right way. It is easier than you might think to end up overspending with a credit card. You must have proper money management practices in place to ensure that you can use the credit card to its fullest advantage. Let’s take a look at some of the things you need to know to be able to do so successfully.
Get into the habit of checking your bill
Try to get into the habit of checking your bill regularly. This will give you an idea of how much you are spending and where your money is actually going. If you are the sort of person who spends here and there without much thought of how much you should actually spend, you can quickly run up a higher bill than you might anticipate.
By getting into the habit of regularly checking your bill, you should be able to see how much you are spending each month and more importantly what your biggest expenses might be on. From here, you can decide to make changes to your spending habits as you see fit.
You also need to get into the habit of checking your bill so you can see if there are any discrepancies that you will need to raise with your credit card company. It could be anything from simply being overcharged all the way to someone fraudulently using your card. You need to make sure that you can account for every spend that might appear on your statement.
Try to pay it off in full every month
You really need to make sure that you avoid some of the high-interest rates that come with credit cards. The card you have might have some terrific extras on it, but the downside is that it will carry a higher interest rate than you might imagine. Therefore, you need to make sure that you are able to pay off your credit card by the right day each month.
Don’t think that this is a date that is set in stone! There are several perks of changing your credit card due date that you might want to look into. Obviously, you will get to set a date that is more advantageous for you. For example, if you set it to the day after you are paid, you can be certain that you will have the money to be able to pay off the bill fully. After all, if you only manage to pay 90% of the bill, you are still going to receive a tax on the remaining 10%. There are plenty more advantages to changing the due date of your credit card bill, so make sure you look into it to find out if it is the right move for you.
Avoid recurring payments and cash withdrawals
If this is your first credit card, you need to make sure that you understand that this is not the same as a debit card. This means that you should not treat your spending with this card in the same way. There are some things that you can do with a debit card that you should never think about doing with your credit card.
For example, you should never withdraw cash using your credit card if you can avoid it. You could end up being charged a higher rate than you would typically, even compared to other payments that you might make with your credit card. You should also try to avoid buying gift cards and foreign currency with your credit card for the same reason.
You also need to make sure that you do not set up any recurring payments through your credit card. Leave the direct debits to debit cards and bank transfers. The danger here is that you might end up with more money leaving your account than you might imagine. This then means that you could be left with a credit card going over its limits, and charges that you might struggle to pay. Cancelling a recurring payment on a credit card means that you will have to get in touch with your credit card provider, and can be a lot of effort for how small a change it actually is. It is better to leave your recurring charges to other payment methods.
Everyone can benefit from having a credit card in their possession, but it is vital that they are able to manage it properly. Make sure you are aware of key metrics like the repayment date and your interest rates, and you should be able to manage your credit card with few issues.