How to Use Your Credit Card Responsibly
Credit cards can be a useful tool when it comes to your finances. They give you the ability of buying now and not having to pay it off until the grace period is up at a later date. There are also many fantastic rewards available through many different credit cards. Rewards can range from cash back, travel rewards to credit within certain department stores or discount stores. While it can be fun to earn rewards through your spending, credit cards can become a spending trap that can plunge you into a heavy debt load that can be very difficult to get out of. Today we will discuss how to avoid credit card debt and use your credit card responsibly.
What is the grace period?
Credit cards come with instructions and it is a very wise idea to actually read through the instruction manual that comes with your credit card. Each credit card comes with a grace period of somewhere around 21 days or so. At the end of the grace period you must pay your balance in full or else you will have to pay interest charges. Just because you make a payment doesn’t mean you will not have to pay interest. If you leave even a balance of one dollar, you will be paying interest on each purchase made, starting from the date of each purchase. Check with your credit card company as each companies rules and regulations may be slightly different.
Cash Advances
The advantage of taking a cash advance from your credit card is that you will have access to money immediately. But is it really worth it when you count the cost? The interest rate on a cash advance is usually much higher than the regular interest rate on your credit card. On top of that when you take a cash advance, there is no grace period given, which means the interest will begin accumulating the day you take the advance. Cash advances should only be used as a last resort in an emergency, not used for splurging or everyday items that can wait until payday. Before taking out a cash advance think to yourself, is this really worth getting myself into debt for?
Responsible use of your credit card
Using your credit card responsibly can prove to be helpful for you. Paying off your balance each and every month and receiving the rewards for using your credit card can be quite beneficial. However if you do not have the self-discipline to spend only what you can afford, you would be best to not use it at all. Here are a few tips to keeping yourself out of credit card debt:
1. Only spend money on your credit card that you already have in the bank. If you don’t have the funds to pay off the credit card today, do not make the purchase.
2. Pay off your balance each and every month. Better yet, pay off each purchase as soon as you make it. If you use your credit card to get groceries and earn rewards, go online as soon as you get home and pay off your balance.
3. Leave your credit card at home. If you don’t have the option of paying with your credit cards you won’t make unnecessary purchases on them. Decide before you leave the house how you will be paying based on your finances at the moment. If you have enough money in the bank to pay for what you will be buying, then go ahead and use the credit card.
If you have already sunk yourself with your credit card use, it isn’t too late to get out of it. Try your best to make as big of a payment as you can each month until it is paid off. If you just can’t seem to see the light at the end of the tunnel then you may need some debt help.
There are options available such as debt consolidation, debt settlement or even as a last resort, bankruptcy. If you would like more information on any of the above, give us a call at 4 Pillars Lethbridge at 403-332-7361.
Our experienced team can help you make the right choice for you and your situation.
