When it comes to managing your personal finances, credit can be extremely useful if you know how to use it correctly. At the end of the day, you’re using money that you don’t own so it can be a little daunting. Unfortunately, if you use credit too much and start to rely on it for everyday things, you can easily rack up hundreds in interest payments that will be expensive to pay off. Credit isn’t something that should be creeping up behind you and constantly making your life difficult. So how exactly should you approach credit these days? How can you be smarter about using your credit card?
Only use credit when you need to
This is easier said than done. Credit cards should be used in emergency situations or when a regular bank card won’t work. For example, overseas payments generally only accept credit cards, so you can use it for purchasing something from a different country. However, if they accept PayPal or a debit card, then it’s probably best to use that instead since you’re using your own money. You should generally avoid using credit for anything that isn’t an emergency or a huge expense that you want to break down into smaller payments.
Know when your payments are due
If you use a credit card, then there’s always a specific date that you need to make your repayments by. You can set this up so it automatically takes money out of another account, but it’s a good idea to know when your payments are due so that you can budget correctly for it. This site offers free tools to help you manage your repayments and calculate the minimum you should be paying. This will help ensure that you never miss a payment and that you can budget correctly for when they’re due.
Always make your payments on time
The last thing you want is to lower your credit rating because you’re failing to make the minimum payment each month. If you do end up with a poor credit rating, there are a number of credit checking services where you can request a credit report. You can also try to repair your credit score if it falls. This is often done by ensuring that future payments are always on time and also focusing on improving your finances.
Keep track of your spending
It’s important to keep an eye on your credit spending because it can easily get out of control if you’re not careful. Make sure you look at your credit card statements regularly to see just how much money you’re actually spending. If you find that you make a lot of small purchases that eventually add up to a large amount each month, then you may want to reconsider those purchases and cut out unnecessary expenses. Ideally, you should be using your own money (such as with a debit card or cash) if you want to make smaller purchases on a regular basis so you can keep track of how much you spend.