Use Your Credit Card Sensibly

A credit card is a wise option if you wish to make frequent purchases and
keep a track of your expenses. The facilities could even be used to postpone
payments on certain articles, thereby earning more interest on your money.
It enables you to shop without carrying large amounts of money, thus
eliminating the risk of theft. However, the credit limit on the card should
be used sensibly, to avoid a bad credit rating.

Ways to use your credit card wisely:

Listed below are some tips on how to manage your credit card
sensibly:

Select the right credit card: It is essential to choose a credit card that
meets your specific requirement and adds significant value to your monetary
assets. You need to shop around and compare cards, before selecting one that
offers the best rewards at low interest rates.

Don't buy if you can't afford: Credit cards make provision for you to 'buy
now and pay later'. However, you should buy only those articles with the
credit card that you are sure to afford paying back, within the time limit
allotted. You should be aware that most credit cards charge an additional
fee and a relatively higher rate of interest on late payments. You need to
carefully analyze the pros and cons of the offers, to increase your credit
card limit.

Avoid paying extra fees: Banks charge an annual fee on credit cards and so
the use of fewer cards would mean less annual charges and minimized interest
rates. Before opting for a credit card, you need to compare the benefits
offered with the fees charged by the credit card company.

Pay on time: It is important to make a regular monthly payment, without
crossing the credit limit. You ought to try and pay more than the minimum
amount. The faster you pay, the quicker you minimize your debt on the credit
card account. This helps to avoid the extra fees charged and the high
interest rates applicable.

Manage debt wisely: It is important to manage your debts in a responsible
manner. It would be beneficial to discuss your financial issues, if any,
with the company and bank. You could adopt a payment schedule to help manage
and curb your credit card debt.

Don't use a credit card for long-term borrowing: Funding long-term borrowing
through a credit card is not advisable.
This would only increase the rate of interest on your credit card account.

Utilize the interest- free period: Most credit cards offer an interest-free
period. The period could be anything between forty-four to fifty-five days.
You are promised additional interest-free days if you make purchases at the
beginning of the month. A comparatively lesser number of interest-free days
are offered on purchases made at the end of the month. You are expected to
pay the entire credit card closing balance within the time limit specified,
if you wish to avoid paying interest on your expenses during the
interest-free days.

Credit cards are a great help to those who wish to avoid paying by cash.
However, you need to make use of the facilities offered judiciously.

About The Author: Joseph Kenny writes for the UK personal finance sites
http://www.ukpersonalloanstore.co.uk and also http://www.cardguide.co.uk