For a smart owner, a credit card is a source of great convenience. With this provision, a person can be a better financial strategist. He or she can pay for bills and other expenses on time and without any stress. At the same time, smart credit card owners earn valuable usage rewards and privileges to further bring ease into their life.
Smart credit card owners are not born however — they are made. These are the people who take the time to study the full power a credit card program provides and understand the complete impact of using this piece of plastic in their life.
Thus, before using a card as a mode of payment, they know that they will pay for that transaction eventually, and it’s imperative to make the payment on time. Otherwise, the decision to use the credit card as a mode of payment will become a financial liability due to the penalty fees.
Needless to say, if you are thinking of applying for a credit card, it is crucial to evaluate your personal financial “character.” Get real with your ability to manage the spending power of this financial tool, and learn how you can become a smart owner of it. To help you with this, here are five tried and true ways on how to manage a credit card wisely:
1. For important transactions, pit the advantages of paying with a credit card against those of paying with cash.
Anytime you feel like whipping out your credit card and using it as a mode of payment, step back for a bit and think about how beneficial doing so would be against paying with the cash you have on you.
It is good to learn to do this as a habit because it puts up a psychological block against impulsive spending and provides you with a reality check about the after-effects of each financial decision.
According to money experts, unless you are working on getting enough points for rewards from credit card use, it is often better to use cash instead. When you pay with cash, you actually see money leave you. Therefore, you want to make sure that the purchase is truly for something valuable.
2. Keep your credit card use below the 30 percent of the spending limit.
This is one of the best strategies to employ if you really want to build your credit score. This shows that you are in control of your finances, and makes it easy for you to cover credit card payments.
3. Master the rewards system for your specific credit card.
There are still a lot of people who waste the perks that naturally come with their credit cards. Go through all the privileges and rewards, as well as the different processes that can generate them. These rewards are basically free money for the credit card owner, and nobody should overlook how they can improve personal their finances.
For example, if you have generated a certain number of points, you can get free services and even purchase premium products just using your credit card points.
4. Do not carry a balance.
A credit card balance will negate the benefits of owning a credit card. It generates interest, which basically means that in the end, you pay more for something that you had purchased with the card. This can impact your credit score, which can then impact your ability to easily access other banking products such as loans.
5. Be open to different credit card options.
Credit cards are not created the same. So, keep an eye out for other options especially when the card you are using is nearing the end of its validity. Go through the fees and rewards to see how they can directly impact your life, especially your finances.
For instance, there are credit cards that come with a rather steep fee. However, when you explore the plethora of benefits such a card offers, you may come to realize that it’s the most beneficial provision out there for your specific lifestyle.
If you travel often, stay at premium accommodations, and enjoy dining at popular restaurants, there are cards whose rewards and rebates cover these more effectively. You can get better hotel packages, free exclusive airport lounge access, and dining deals.
The bottom line here is to find the perfect match of a card for you to ensure your best advantage.
Swipe it right
These tips are all so easy to follow, your only job is to remember and apply all of them. So the next time you decide to swipe, you’ll know that it will definitely be to your advantage. This way, you can be certain that your credit card will be a complete asset to your life.