Friday, February 3, 2023

How To Use A Credit Card Wisely To Avoid Debt

 A credit card can be very helpful to have in life but it’s something that you want to be careful of. It’s not your money at the end of the day, yet some forget that to be the case. If you’ve not had a credit card before or you’re needing some advice on how to avoid credit card debt, then you’ve landed on the right page.

Using a credit card is all about using it wisely. With these tips, you’ll be able to take advantage of all the benefits that a credit card can bring without needing to deal with the negative sides of a credit card aka credit card debt.

Here are some tips on how to use your credit card wisely once it’s in your hands.

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Keep your credit card out of sight until emergencies

To help create a healthy relationship between you and the credit card, keep this card out of sight until an emergency happens. You may want to use it to pay off all your bills for the month and then pay it off immediately after. If that’s the case, make sure this is all that you use it for and that you don’t start extending the time you pay those bills back with your income.

Keep that credit card out of sight until it’s needed. You ideally want to use a credit card occasionally when a bigger expense comes along that can’t be covered with your monthly income as a household.

Make sure you have a credit card limit you can pay off easily

A credit card limit is set on every card and depending on how much you are borrowing each time, as well as your income will determine how big your limit is.

Of course, the bigger the limit, the more risk there is of dipping into it too often and building up huge amounts of debt. It’s important that you have a credit card limit that you can pay off easily, rather than finding yourself in a credit debt that is taking months or years to pay off.

Stop any rising credit card limits from the provider 

Talking of credit card limits, one of the dangers that come with using a credit card is that your provider will sometimes raise the limit, providing you with more funds to spend. This is likely due to occasions where you’ve spent consistently and paid it back on time. 

While it’s handy to have for some that need it, it’s not wise to have large credit card limits that will only tempt you to spend more.

Keep an eye on your outgoings for any unusual activity

As with any other card that’s linked to your bank accounts, it’s important to monitor your outgoings for anything unusual. The same goes for your credit card as this can be a vulnerability that some scammers out there will try to exploit.

Try to keep an eye on your outgoings so that you know exactly what’s coming out of the credit card and what has been paid in. If you’ve been a victim of a fraudulent attempt on your credit card, then it’s important to be active in your efforts to resolve it. 

Not only that but you’ll want to heal emotionally after fraud as it can be quite a turbulent experience to go through.

Avoid fees for late payments

With credit cards, you want to try and avoid any fees where possible as that will only add to your credit card debt over time. Avoiding those late fees will help you stay on top of your payments because no one wants to find themselves charged more money for simply not paying on time.

It’s worth setting a note in your diary of when you need to make a payment. That way, you’re less likely to miss the payment window and as a result, find yourself in financial trouble with your credit card.

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Have a time limit to pay off your credit card 

To help stay in control of your credit card, try to set a time limit of when payments need to be made to pay off the balance remaining. Try not to get into the habit of putting purchases on your credit card and then saying you’ll deal with it at some point further down the line. That’s not a good attitude to have and it’s one that may cause some issues with your credit card control.

A time limit of a week or two, a month at most is a good period of time to set. It gives you enough time without needing to panic or get stressed out about it.

Lock away the card to avoid the temptation

The card that comes with the credit card account should be locked away to avoid the temptation of spending on it when you’re out and about. Try to put this card away and out of sight from your purse or wallet whenever you go out. If it’s not necessary to have, then it shouldn’t be on your person.

If you want to carry it for emergencies, then it’s worth freezing the card via your mobile app if it’s possible. That way, you won’t be tempted to spend on it spontaneously. 

Get rid of it if it’s having a negative impact

For some people, having a credit card is a dangerous trigger that can only encourage haphazard spending. It’s important that if it’s having a negative impact on your finances, get rid of it. If it’s something that you’re unable to take control over, then it’s definitely worthing at financial alternatives that are less worrying to have in place.

Using a credit card can be useful for those who are looking to spread the costs of big expenditures in life. With that being said, make sure you’re using it appropriately and not being too tap-happy when it comes to using credit cards for everyday purposes. It should really only be used for big life expenses.

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