How to use credit cards wisely
Credit cards can be a useful way to manage money, but only if they’re used in the right ways. Unfortunately, sometimes, we can get carried away.
That’s a bad idea. The interest on credit cards can stop you from achieving your financial goals. Thankfully, it’s easy to make sure you don’t go overboard. Here are some things you can do:
- Reduce your debt limits. Often the limits we have on our credit cards are way higher than we need. Have you ever actually used all your limit? If not, consider reducing them. It’ll stop the amount of trouble you can get yourself in - and increase your borrowing power as banks will assess your repayment on the limit of your card, not the balance.
- Pay them off every month. Never let yourself be charged interest on a credit card. It’s just wasted money that could be better spent saving up for a house!
- Use a written budget. Credit cards shouldn’t be used to pay for things that you want, but haven’t budgeted for. Use a written, detailed budget to figure out just how much you should be spending in each category, then use the credit card as a tool within that budget.
- Keep saving cash to dampen the impact of unexpected expenses. Sometimes things happen. A credit card can be handy if that’s the case, but always try to use cash first.
- Don’t carry your card around with you. It’s the little things that add up. Instead of having your credit card in your wallet or purse, only take it for things you absolutely know you’re going to buy. That way you remove the temptation.
Ultimately, credit cards can be a useful tool – but remember, they’re just a tool. They shouldn’t be a way of life. Just incorporate some of these techniques into your everyday habits and you’ll find your finances will be stronger and healthier – and you’ll be closer to buying the house you’ve always dreamed of.