Your credit card can act as a valuable tool if you use it correctly. And using it irresponsibly will affect your personal finance management. Based on recent research and statistics, an average American family has about $7,200 credit card debt. The amount is rising per year even when a household struggles to clear the credit card debt and lessen financial pressure.
Based on a study conducted by Duncan Simester and Drazen Prelec back in 2001 named “Always Leave Home Without It.” The study revealed that people who use credit cards usually spend twice as much for a product. It’s because they are not shelling out cash. And this mismanagement results in financial negligence and credit card debt.
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Making the correct use of credit cards
There’s no need to give up on credit cards completely! You need to create a correct usage strategy and follow it. Make sure that you don’t abuse credit card use. Also, choose a credit card that offers benefits like low-interest rate and complete control. Other rewards are cashback offers, bonuses, and usage flexibility. To know more about it, you can check out the Personal Finance Analyst Review. You can follow the pointers below to make your credit card a best friend.
Pay the total bills monthly
If you wish to stay debt-free, make sure that you stay away from credit card debt. It means charging only the amount that you can afford. Also, you need to pay the entire bill monthly or, at times, a few more times to avoid other hazards.
Never delay your bill payments
Paying bills isn’t enough. You have to ensure the payments are made on time. Usually, the credit card issuers pay a late fee for late payment, and the amount is high. Also, close to 35% of an individual’s credit score depends on their payment history. When there’s a missed payment, it will hurt your credit score. On the other hand, when you pay all the bills timely, it helps you get a low-interest rate and enhance the credit score. It is beneficial for your overall financial health.
Create a reminder if you feel you might miss out on the payment date. Also, manage the online credit card account settings in a way that the bill gets paid automatically. Choose a particular day that you feel is comfortable using a direct bank draft.
Compliment your budget with the credit card
When you follow a disciplined approach towards credit card management, make use, you create a personal budget. Here you can create a budget list in pen and paper and use your credit card accordingly. You need to set specific limits. It is an excellent way to get several rewards for online purchases that you will make. Also, you have access to other security benefits that only a credit card provides. For instance, if there’s fraudulent activity, you need to inform the credit card provider that they will resolve the same.
These are some of the situations where it makes complete sense to make use of a credit card. You can speak to financial consultants and adopt other credit card measures that work in your favor.
Author Bio –
Kristen Smith is a blogger and content writer who write many articles on Social Media and Technology. She enjoys reading a new thing on the internet. She spends a lot of time on social media.
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