How to Responsibly Look After Your Credit Cards and Spend Well
My first thought when I first received a credit card was that I would then be able to buy anything that I desired. Many will feel tempted to then overspend but this is not advisable as you will still be required to repay the amounts involved. However, it is comforting to note that you can now afford things you could not otherwise afford or would have to wait a longer time for. The way, though, that you will manage all your credit cards, assuming you have more than one, will impact on many areas of your life. These will include your eligibility when it comes to obtaining a mortgage or a loan. I have created some tips below that will help you to better manage your credit cards in terms of using them as part of spending. This will help you to not have any regrets.
There have been studies that have indicated we are likely to spend far more money when we use our credit cards to buy items as opposed to using cash. When we pay in cash it tends to have the kind of psychological effect that will prevent us from spending beyond our means. This hesitancy seems to completely disappear when we have a credit card in our wallet. The way that I avoid this negative impact is by ensuring that I still only buy what I need. I will always keep records and monitor my spending so that my account does not become overdrawn, and my credit card statement does not end up with an unaffordable balance showing.
It is good to always have a plan concerning your spending, which is termed a budget. By recording and projecting both income and expenditure, you can then see clearly how financially well off you will be in the longer term and what areas of your spending you might need to address. It becomes much easier to say “no” to yourself when it is a budget that you have created.
Another way to manage money better is to learn how to reduce expenses. This will aid cash flow. You could, for instance, consider looking for savings whilst using your credit card to grocery shop, looking for deals and coupons (like those at: https://www.raise.com/coupons/walmart) to help reduce the amount you will have to pay. Special offers will encourage you to buy things that you do not need, so be careful to still stick to your budget, as planned.
It will make it easier to pay your loans and credit card balances on time and keep you away from debt when you give budgeting more thought.
Ensure that you always pay off your credit card balance on time to avoid debt from mounting and a poor credit rating being recorded against your name. An inconsistent payment record with credit card balance settlement will make it more difficult to obtain a loan in later life. You can make use of a credit card to improve a credit score, which will then make you more eligible for a loan. To build up a credit score you will need to make several purchases on a credit card each month and then be sure to settle them on time. Each time that you pay your credit card bill on time, your score and information will be shared with credit bureaus. If you want, you can opt to have a credit card with low APR for your expenditures to ensure that your repayment amount will be significantly lower.
Rewards and Cashback Opportunities
Many times, I have used my credit card to earn me travel rewards as well as cashback. When using your credit cards responsibly, you will be pleasantly surprised by how much you can save each year. Sometimes you can be interested in finding the best credit cards that can offer you features and rewards such as cashback. You should look to use one or two cashback credit cards to make the most of your purchases. Also, do not get stressed too much about which reward credit card you should obtain. All the reward credit cards tend to yield similar benefits, depending on your level of spending.
Take Extra Care When Paying for Larger Purchase Over Longer Periods
Most of the credit cards out there will allow you to pay for more expensive purchases over time. Although, this is not always the best option, particularly where payments accrue interest. Then, instead of using your credit card to be able to pay off larger purchases over several months you could, instead, save money ahead of time and then pay in cash. I would not advise that you borrow money using a regular credit card rate when you can avoid it. Where there is no option and larger purchases need to be made you can, of course, but it will cost you dearly.
Credit cards can be thought of as a powerful tool in terms of the buying power that they can give you, but you do need to know how to use them responsibly for them not to become your downfall. You do not, after all, want to amass a huge and accumulating debt that then takes years to pay off. Credit cards are a convenience and a positive payment innovation when used responsibly.
Live Life Affordably
Always live within your means by only purchasing items that you can afford, even when using a credit card to delay payment. Most of the companies (brick-and-mortar or online), these days, tend to use merchant services from the likes of Easy Pay Direct, that will allow for easy and smooth credit card transactions. This will encourage you to shop more, and then more still, and potentially make it hard to control your spending. However, the necessity to live within your means should always remember the key to effective credit management and a responsible attitude towards personal finances. Even when buying using your credit card, you will need to make sure that you can afford the repayments when due.
Hopefully the above tips will mean that you can more responsibly and effectively use your credit card when it comes to your spending.