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5 Financially Prudent Ways to Use Credit Cards

It’s pretty easy to go on a spending spree and max out your credit card. However, as you probably know, overspending with your credit card can put you in a dangerous financial position. With that said, let’s take a look at five prudent ways to use credit cards.

Use Your Credit Card For Big Ticket Items

Sometimes it might just feel like your credit card debt grew overnight, and you are surprised as to how your balance got this significant.

It’s typically caused by all those small purchases you make – the $10 subscriptions can leave a dent in your balance when they come together. It’s better to use your credit card for big purchases or big-ticket items like a TV or a new tablet. 

Depending on your credit card provider, these purchases often come with credit rewards like cash back. You could also get benefits like price protection and purchase protection. 

Always Destroy Old Credit Cards, Even if They’re Past Their Expiry Date

If you have received a new credit card because the old one met the card expiry date, you are probably ready to toss out the old credit card. You should destroy your old card before throwing it away, even if it’s past the expiry date.

Destroying your old credit card would render the information stored in the EMV chips or the magnetic strips useless. You can get this done quickly by putting your card in a paper shredder. 

You can also make use of scissors but make sure you cut it up into small pieces, making horizontal and vertical cuts before you throw it out.

Know Your Credit Limit

Your credit limit is the amount of credit allocated to you by your lender. By knowing your credit limit you’ll have a clear-cut picture of how much credit you can reasonably spend each month.

It’s important not to max out your credit card if possible. You shouldn’t spend more than 20% of your limit. You can also request a lower limit from your credit company if you are worried that you won’t be able to control your spending.

You can also set a personal limit yourself, say $1000, and whenever you hit this limit, you can lock your credit card in a drawer till the next month. This way, you would always be able to afford your monthly payments and protect your financial health.

No Late Payments And Always Pay In Full.

Many credit card companies charge fees as high as $39 for late payments. Missing payments can also affect your credit score as your score typically revolves around your payment history. 

You need to handle your debt with care, don’t bill more than you can afford to pay, and complete your payments every month. You could even make your monthly payments a few times to keep ahead.

To avoid ending up with a bucketload of credit card debt, you should always make your payments on time and as at when due.

Make The Best Of Your Points And Credit Card Rewards

You can save money by racking up and using your credit card rewards and points. Some credit cards offer cardholders rewards like cash back rewards, airline miles, and other benefits to encourage cardholders to spend with their credit card. 

For instance, your reward credit card can offer 2% cashback on all your purchases at a particular store or a set of items.

Nevertheless, it is counter-productive if you try to rack up your rewards and carry a balance you can’t pay back. While trying to maximize your rewards, don’t raise a balance past your budget.


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