How To Tame Your Credit Card

It is undeniable that credit cards have become the mainstay of most consumption done by individuals. There is something about the convenience of just being able to buy whatever you want without needing to carry cash, or have the cash for that matter. As many would attest though, that convenience often comes at a heavy cost. Credit card debt is the leading cause of financial ruin in most peoples’ lives. The situation has become so bad that the mere mention of the term ‘credit card’ is sometimes tied to the irresistible yet damaging allure of the facility. Having a credit card does not necessarily have to be synonymous with ruinous credit though.

To begin with, if you have a credit card, strive to budget for your credit allowance. As a general rule, the amount of purchases you make on the card should not exceed a third of your total earnings. This means that the debt you carry should be a minimal fraction of your income.  Failing to follow this simple equation may negatively impact your long term financial plans or big purchases that you may want to make in the future.

Remember to be diligent in assessing your credit card statements. Benchmark these with your credit report frequently. The whole concept of purchasing on credit rests on the level of trust that lenders have in you. As such if your credit record is generally bad, you will be considered a risky investment and most financial services providers will rather not deal with you, or offer exorbitant interest rates. By regularly accessing your credit reports and statements, the maintenance of a ‘clean’ credit report is made easier.

While the credit card is a good way to access various goods and services as you need them, it is a good idea to always evaluate the different accounts and cards you have at any given time. Some expenses are only incurred once or twice in the year and if this is the case, there may be need to consider closing them off. The last thing you want is to incur interest costs on a monthly basis for something that you only use once in the year.

Finally, make sure you take not of the so called, ‘fine print.’ Policy agreements regarding your card are drafted differently for different cards. Some of the conditions that may be outlined include annual tariffs, transfer fees and cash advances. It is thus best to acquaint with your specific card terms and use it to the best of your advantage.

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