Improper use of credit cards will have several negative effects on our financial condition. Credit cards do offer a variety of interesting programs in shopping or meeting our daily needs.
However, if you do not have mature financial planning and cannot control consumptive behavior, then using a credit card will further add to your debt burden.
The following is our wise advice regarding the use of credit cards:
7 Ways to Use Credit Cards Wisely
1. Choose a Credit Card According to Needs and Capabilities
The first way to use a credit card wisely is to choose a credit card that suits your needs. Banks offer a wide selection of credit card types that you can use according to your abilities and needs.
f you feel that owning a credit card is more for shopping for daily needs, then choose a credit card that works a lot with merchants providing daily needs or supermarkets.
If you use a credit card more for traveling purposes, then choose a credit card provider that offers attractive programs with accommodation and traveling services.
After you determine the preferences for using your credit card, then you can determine the credit limit. The credit limit will ultimately be determined by the bank according to the income and routine expenses that you have.
The use of an appropriate credit limit is also needed so that your credit card usage does not exceed the income per month that you receive.
So, use the credit limit wisely. Don't be tempted to increase your credit limit if your financial planning is immature.
2. Pay attention to the fees that appear and the facilities offered
After you have reviewed the types of needs for using a credit card, then you can consider the costs that arise when using a credit card.
Fees that appear on credit cards consist of annual fees, late bill payment fees, interest fees, over limit fees, and others. Make sure you know the percentage of each fee that appears on the credit card.
Currently, several credit card providers have offered 0% interest installments, so that it can ease the user's monthly installments.
3. Take advantage of the promos offered by credit cards
Saving is the third way to use a credit card properly and correctly. Saving this time means being able to take advantage of promos held by credit card providers. Use these promos to reduce your monthly expenses.
The promo can be in the form of a percentage discount when shopping at supermarkets, eating at restaurants, travel expenses, staying at hotels, and with other merchants who have worked with credit card providers. Or you can also get points that can be exchanged for certain benefits.
4. Paying Credit Card Bills On Time
Like mortgages and car loans, credit cards also have rules for paying bills on time. If the user is late in paying his bills, fines and interest will be charged later which will make his monthly bill even bigger.
If the user is late paying the bill, it will also worsen the credit score . If a prospective debtor has a history of substandard payments, it will affect approval in applying for loans at other financial institutions. Therefore, always pay credit card bills on time!
5. Pay Credit Card Bills in Full
Apart from paying credit card bills on time, the correct way to use a credit card is to pay the bill in full. Credit card providers usually provide a minimum payment of 10% of the total bill per month.
However, this will give the habit of "dig a hole close a hole" if the user does not have good financial planning. Paying bills per month in full means that you understand and are responsible for all the consequences arising from using a credit card.
6. Avoid Withdrawing Money Through Credit Cards
Another feature that can be utilized from a credit card is withdrawing money just like using a debit card. However, its use is not as popular as debit cards. In fact, withdrawing money from a credit card is the same as taking a loan from a bank.
It's another case, if the user takes money from a debit card, because the user gets the money from savings that have been accumulated for a long time. Focus on using credit cards as a means of facilitating shopping and adding assets, not being a source of cash.
7. Limit Credit Card Ownership to a Maximum of 2 Fruits
Although there is no limit regarding the maximum number of credit cards owned. However, it is recommended that you do not have and use more than 2 credit cards.
If you can't manage your finances well, then it's feared that you will add to the debt that has the risk of not being paid off.
Also remember, costs such as annual fees, interest fees as well, and other fees will increase along with the number of credit cards you have.
By limiting credit card ownership to taste and how to use credit cards wisely, of course, this will reduce consumptive behavior.
Those are the seven tips on how to use a credit card properly and correctly. The key lies in good financial planning and how you control your urge to shop.
If you manage the use of credit cards properly, surely your life will not be burdened by when and where to pay debts on time.