Many people use a credit card to pay for everyday items while others use it only for big ticket items if they don’t have enough in their bank accounts. It is wise to remember that the money you use via your credit card is not your own; it is virtually an unsecured loan from your financial institution and often has an extremely high interest attached. While credit cards often get people into debt that is difficult to get out of, it is also possible to use credit cards strategically to benefit you.
Build Up A Good Credit History
For a start, when you use your credit card wisely and always pay it off on time, it builds up your credit history. Then when you need a bank loan for a home or car, the lender can see at a glance that you are a good risk and that is likely to attract a much lower interest rate on the loan. This can potentially save you thousands of dollars when you realise that the interest you pay on any loan will compound over time.
In addition, being able to get a loan quickly due to your good credit rating may be the difference between getting the home of your dreams before someone else gets it. This too, can save you paying rent while waiting for the home you want.
A credit card is a good way to pay for things while overseas. It saves you carrying cash that could potentially be stolen or lost. Some credit cards offer travel advantages of various kinds that can save you a great deal. Most airlines reward credit card holders with some sort of points scheme that in the long run may be redeemable for free flights and discounted accommodation.
Many credit cards offer rewards for everyday use, which may include frequent purchases like your fuel, phone bills and groceries. People use their credit card in replace of their everyday savings accounts in order to accrue certain points or minimum spends to receive rewards, even though they can afford not to have a credit card. When you receive your monthly statement, try to pay off the balance in full so that you don’t get charged with high credit card interest rates. If you’re not able to pay it off in full, they make sure you use the credit card as little as possible because the points gained from using the credit card will never be worth more than the interest charged by an outstanding balance.
When you use a credit card it can help to protect you against fraud or overcharging by some companies. If you have been overcharged, having the credit card company take up the dispute on your behalf is far more likely to gain a good result than if you did it yourself – and it is far less stressful for those who dislike confrontation.
You can use your credit card receipts to check against your bank statements and may catch any mistakes that have been made by the bank. This happens more than most people think. Getting it resolved in time can prevent a black mark against your reputation and save you money.
Most banks won’t make you pay anything that the card was used for if it is stolen, but it is essential to contact them as soon as you miss the card. In fact, they will often reimburse you for the amount that was stolen from you, how good is that?
Why You Should Read The Fine Print
It is essential to read the fine print when applying for any kind of credit card. Not only do you have to work out just how good – or otherwise – the interest rates are, you also have to see whether those interest rates continue after the first month or so, or whether they increase.
By reading the fine print you will also find out all about the good deals they offer, rewards for certain actions or certain amounts spent in the first three months and so on. If you want to buy something that is more expensive than usual, it is a good idea to get a new credit card to do it with as you can often get a discount of a $100 or so. Every little bit saved helps.
Once you know all the finer details it will enable you to make a wise choice of which card to use and help you to use it responsibly; not just to drive up your debt.
Debt Consolidation With Credit Cards
If you have a range of different debts and have to pay them all off at different times it can be very confusing. Find a credit card with low interest rates and use it to transfer the balances from your existing cards into one consolidated credit card or loan. When you consolidate debt in this way, you can save on the overall interest as you have the one debt to pay off. It also really helps you to keep track of exactly what you owe.
The whole idea of using a credit card is to help make your life easier and more convenient. But in reality credit cards has the potential to do more harm than good, so if you don’t need a credit card, it’s best to stay clear.
For more expert advice, speak to us. We’re here to help! Contact us today to get professional debt consolidation advice so that you know for sure that you are doing the right thing.