Credit cards are one of the most ubiquitous items on the market in the UK, and perhaps globally. We all know about them, and most of us have had at least one at some point. Well done if you have not! But whilst they have been of great benefit to millions, they have also had a very negative effect on many. With that in mind, Moolr took a look at how to use a credit card effectively.
Start With A Good Offer
Credit card competition is fierce, in a very crowded market. And every credit card has its own appeal – be it a balance transfer offer, money back on purchases or simply excellent interest rates. Before using a credit card, you need to decide which type of card suits your needs. Work out what you will use your card for and choose a card appropriately. There are a host of comparison sites that collate the information for you so that you can see what is on offer. Once you have your card, take on board the following tips so that you get the most out of it.
Don’t Miss Payments
Missing payments can result in charges and loss of certain benefits, which makes it important to keep up with your balance. Do so even if it means paying the minimum monthly amount. Failure to make a payment can lose you the great terms that enticed you to the card in the first place. and linked to making payments….
Set Up A Direct Debit
From personal experience, this should go right to the top of the list. If you think you might not remember to make your payment each month (and I can’t), you could try setting up a direct debit for the minimum monthly amount to ensure you can at least meet that payment. Automatic repayments means you do not have to do anything, bar ensuring there is money in your bank account to cover the payment.
Pay More Than The Minimum If Possible
It makes financial sense to do this if you can. Ideally, pay off the full amount each month. This can help you keep control of your balance and avoid going into debt.With interest free credit cards it can be as good as an interest-free loan. By just paying the minimum, you will eventually hit a raft of charges.
How To Use A Credit Card Effectively – Take Advantage Of Rewards
As already mentioned, get the card best for your needs. But also make the card work for you. Rewards can be a great bonus from your credit agreement. Not all are free, so check that they are worth your while.
Use Your Card Sensibly
It’s easy to get in the mindset that a credit card is a gateway to free money. Access to funds that can be paid off another time. This is a surefire way to get into debt, quickly. So treat your card like you would treat money in your pocket. Use it for necessary purchases, and not to rack up debts treating yourself.
How To Use A Credit Card Effectively – Apply Sparingly
Credit card applications can leave a mark on your credit report, and too many of these are generally an indicator of poor finances. Be sensible, and do not employ a scatter gun approach to applying.
Check Offer Terms
If your card has a period of 0% interest, ensure you know when that period ends, and try and pay off your card. Credit card companies rely on people not doing this, and eventually paying tonnes of interest on borrowed funds.
