Get Wise Before You Swipe: Four Mantras You Have To Keep In Mind Whenever You Use Your Credit Cards2 min read
A credit card can be a useful tool, provided that you know how to use it responsibly. However, you need to remember that with every swipe made through the card reader is money borrowed from the bank. Left unchecked, the interest can accumulate over time and next thing you know, you’re paying way more than you should be. Here are a few things you have to remember to keep your bill interest-free and your credit record squeaky clean.
To swipe = To loan
Whenever you use your credit card, the bank that issued your card is actually lending you money to make the purchase possible. Since it is a loan, you have to pay it before the due date or you have to deal with interests later on, as well. If you use your plastic beyond your ability to pay, this is where the trouble comes in.
Credit card is not additional money
Just like what was previously mentioned, you must always remember that owning a credit card doesn’t mean having additional purchasing power. Credit cards only serve as an alternative to cash payments, and you still have to settle your balance whenever the bill arrives. When you think of your card as a cash extension, it’s the beginning of a downward spiral of money mismanagement—and you will end up paying more because of that.
Always pay before the due date
All credit card owners must consider the due date a sacred date of the month. Why? Because failing to make payments before that day spells arrears. Balance unpaid after the due date will start to accumulate interest, and this will not just affect the total amount you have to pay over time. Arrears can negatively impact your credibility too, making it more difficult for you to apply for loans in the future as it reflects your lack of capability to make payments at the right time.
Take advantage of promos and installment programs
Credit card providers come up with different strategies to spoil their clients and make sure they use their credit cards when purchasing. Discounts, reward points, and zero percent installment schemes—all of these can be advantageous to cardholders if they know how to use them properly. For instance, some shops offer as much as 50% discount whenever you make a purchase using merchant credit cards. Furthermore, 0% installment programs are useful when buying expensive items without paying them fully in cash. While it means that your purchase will be free from interests, you have to adjust your payments accordingly to ensure that you will be able to fully pay it off before the due date.
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