Credit cards can be very useful if used properly.
Nobody wants to carry cash all of the time. Getting a merchant to accept a personal check can be grueling.
If properly used, credit cards provide a cushion against life’s unexpected emergencies.
They also can enable you to monitor and track your spending habits if you are attentive to your monthly statements.
Credit cards are basic fact of everyday life.
That’s why being a smart user of credit cards is a key element of staying on the right track. Here are some rules for being a smart user or credit cards.
know what the credit card will cost you. Credit card debt is basically short-term debt and because it is unsecured, sometimes a higher rate of interest is used by the credit card companies to compensate for the higher rate of defaults. Know the current rate of interest on your credit card before you start making purchases.
Know what the grace period is. Some credit cards don’t charge interest on a purchase until 25 days after you make it. That allows you to pay the bill in full,without incurring an interest charge. With other cards, if you have an unpaid balance, the interest charges on each new purchase begin the instant the charge goes through.Know the grace period,if any,that your card features.
Don’t overload on credit cards. You may receive a dozen offers of credit cards each year-each card with its own credit limit. Activate them all and you could quickly pile up more debts than you could pay in a lifetime. The fewer credit cards you carry, the less temptation you’ll have to use your credit cards unwisely.
Keep tabs on what you spend. Don’t wait for the monthly statement to total up your credit card charges. Use a pocket notebook or smartphone app to record each charge when you make it. Set a limit for credit card charges each month. When the notebook says you’re at your limit,put the card away until you’ve paid off enough charges to move away from your limit.
Smart ways to manage credit cards. Many credit card companies require you to pay only 2 percent of your outstanding balance.However,by paying more than the minimum amount that is due each month on your credit card, you will find that the total interest paid will be less-in the long run.
You may have more options for paying down your credit cards and lowering your interest charges than you realize. Start by looking for places where you have cash that isn’t earning as much as you would like.
Then decide if you should liquidate some or all of those financial assets to pay down your debt.
The earning on your savings and investments are also just estimates you are not factoring in the effect of compounding.For stocks,bonds,and mutual funds, use your total returns for the latest 12 months, which includes dividends and price increases.
Here are other wise ways to take control of your credits cards:
Consolidate two or more credit card balances by transferring them to the card with the lowest interest rate . Keep paying the same amount on the combined debt as you were paying before. But be aware: Some credit card issuers don’t charge you anything to handle balance transfers. Others may treat transfers as a cash advance and may charge you a small percentage of the balance as a fee.
Consider accepting a new card with a low introductory rate use cash advance on that card to pay down your other, higher-interest cards.Remember,though, that this requires the discipline to limit your added purchases on the new card until you can get at least a good portion of the other cards paid down.
Take out a home-equity loan. The interest rate on these loans is typically lower than the interest rate credit card companies charge. And the interest you pay on a home-equity loans is tax deductible.
After you have paid down one credit card, take the extra payments you were making and add that amount to your to your regular payment on another card to help pay it down.
Set Priorities for Paying off other debt-If you can’t make all of your debt payment,then you may need to start a home base business.Contact us today for some help.Call 520-829-0088.