How To Use Your Credit Card Wisely

I would like to clarify that I do not have anything against using credit cards. In fact, I believe that credit cards are a big help in stretching our budget.

It is important, however, to know how to use your credit card wisely so as not to find yourself buried in debt.

1. Know your own budget. Know how much you can afford to spend each month. Allot a specific amount for credit card payments.

2. As soon as you get your card, take note of the cut-off date when your purchases will be totalled. Mark this on your calendar.

3. Also as soon as you get your card, take note of the deadline of monthly payments. Mark this more prominently on your calendar.

4. Monitor your credit card purchases and have a running balance. Make sure that you are within the budget you set for yourself. Total your purchases at the end of the cut-off date.

5. Pay your credit card purchases in full each month. This way you don't pay interest. You still get several weeks of credit and, if you plan your purchases well, these few weeks can already help you stretch your cash flow.

6. Take advantage of zero interest installment plans IF you cannot afford to buy the product in cash.

If you have the money, though, you will almost always get a good discount if you pay in cash.

The next best thing, for items that you really need right now, is the zero installment plan. Just make sure that you factor in the monthly payments in your monthly credit card budget.

7. Do not withdraw cash against your credit card except in serious emergencies. Cash advances have much higher interest.

8. If you find yourself unable to pay the full amount due, pay the highest amount you can afford to minimize penalty interest. As soon as you get some more cash, immediately pay off the balance. Remember that the longer you stay in debt, the higher you pay in interest.

If you use your credit card wisely, it can be a good financial tool rather than an instrument of immediate gratification with dire consequences.