Financial literacy is a skill you can learn from a lot of avenues. Sometimes, you can learn the way how money works and all related aspects from your parents. In other instances, you can pick them up from vast resources like the internet and experts who share their knowledge regarding the world of personal finance and money handling. However, one often overlooked way to learn about the mysteries of financial literacy has always been with us: credit cards. How can credit cards make us wiser and better people in our finances?
The concept of debt and debt management
Whether you like it or not, you borrow money from your credit card issuer whenever you swipe your credit card. By carrying every purchase you made on your account, you accumulate an amount which you have to pay eventually. If you do not pay your credit card account on time and in full, you will incur interest based on your outstanding balance and interest rate. While you may learn about calculating interest using your credit card, the biggest takeaway here is that credit cards will give you a clear understanding how debt works and the repercussions of mismanaging your debt. Before you even get neck-deep in credit card debt, make sure to pay your credit card bills on time and in full.
The art of budgeting
Managing your budget and proper allocation of your resources is something that you cannot acquire in school. While there are many tried and tested ways that will help you budget your money, nothing still beats learning from your expenses and making custom budgeting based on your expenses and income. How do credit cards fit in your budgeting? With the help of credit cards, you can easily track what goes in your account and see if you have unnecessary expenses riding on your credit card. Furthermore, you can go back to your previous credit card charges on a whim and look at your history—and tweak your budgeting according to your need.
Taking advantage of money-saving discounts and promos
Promos and discounts are good ways to help you cut your expenses even by a little bit, and they will come in handy if you’re targeting huge savings. Fortunately for credit cardholders, there are always promos and discounts around the corner. To keep their customers happy and satisfied with their services, banks always have promos and discounts for all credit cardholders. Aside from timed promos, some credit card types have specific perks specially designed for each consumer group. So before you apply for a certain credit card, make sure that you are getting the right type of credit card for you so you can maximize the rewards that come with your credit card.
(Check out: Best BDO Credit Card Promos for April 2015)
Impeccable money security habits
Credit card companies continuously introduce newer ways to make sure that the entire credit card system. However, modern-day crooks and digital con artists also continuously find ways to take advantage of unsuspecting credit card holders. Because of this, people still get victimized by the most common credit card scams such as cloning, unauthorized charges, and other ways of conning people. Fortunately, the same level of security habits are also applicable to cash, and once you include tight security regiments to your credit card handling, the rest will follow.
When you look at it from a different perspective, credit cards are actually good teaching tools to help you understand the wonderful world of finance. Just make sure to be careful with your use and learn from your mistakes and the rest will be easy.
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