Nowadays, most of the people carry credit cards of different banks, financial institutions, retail stores and even gas stations. All these are specifically designed to make your transaction process easier and cashless. However, at times you may find it a bit troublesome to keep your credit card balances as well as the debt under control.
In such times there is no point in beating yourself up because you are in the same boat as thousands of other credit card users. There are specific ways in which you can use your credit card sensibly and retain your night’s sleep.
Mistakes to avoid
Credit card users often turn up in such situations as they do not follow the rules of thumb when you use the cards and in turn find their debt more unmanageable. If you know the common and major mistakes to avoid while using a credit card, you will be able to maintain a manageable debt as well as a fair bit of balance in your credit cards.
Most people will often jump to blame your spending habits and ask you to change it in the first place. Well, though this is true but this is a giant step because changing one’s habit is never easy. Prior to that, you should follow a step by step approach to attain financial freedom in the end.
- One of the most significant mistakes that the credit card users make is by paying the minimum balance only. No matter how tempting an offer it is to send in minimum monthly payments that are usually very low often ranging between $15 and $25, you will not be able to avoid its consequences. In fact, you will add to your financial duress if you follow this approach.
- Do not do this because credit card companies will charge very high interest rates of interest on your balance amount that will significant keep on growing every month till it reaches the sky. Instead, you must send in the highest payment that you can afford given your financial condition and budget. This will reduce the balance and apart from that it will also reduce your spending in other areas.
- Focus on paying off your current debt first and fully before you take on the new ones using more credit cards. You will sleep better at nights if you temporarily postpone your idea of buying a smartphone, latest fashion or any extras that you can do without till the time you regain substantial control over your finance.
- Aim to be debt free soon by paying your credit card bills more. This may not seem like you are saving on money but actually you are. Here comes in the complicacy of credit card interest rates. Depending on the rate, you will save anywhere between 10% and 29% per year on an average in interest on any credit card balance that you pay off.
- Make sure that you do not use your Macy’s credit card for everyday items besides the extenuating circumstances. Ideally, you should have a strong and precise budgetunder control so that you can pay for the necessities out of your monthly income. These expenses include groceries, utility bills and others. This approach will help you to get your spending under control. You will tend to buy these items more than you need when you use a credit card. Therefore, use cash as much as possible and keep your credit cards aside.
- Do not fall into the debt trap of credit cards chasing the rewards. Usually, credit card rewards are worth far less when you compare these with the extra amount of interest you will accrue in case you fail to pay back the money you spend simply to earn the bonuses. Since the interest charged on your outstanding account balances will more often than not exceedthe typical 2% bonus, credit card rewards are never to be considered as a worthwhile tradeoff.
- Do not signup for multiple credit cards no matter whatever be the bonuses offered. You should specifically avoid this temptation of owning multiple credit cards if you know about your inability to manage credit cards, debts and the spending habits well. It is much easier to miss the payments deadline if you have multiple credit cards rather than a single card as your focus will be restricted to one card only.
- You must know how to avoid new debts one you pay off the previous balance in full to avoid late fees or interests that may fast obliterate the sign-up rewards and gifts. The most significant way is to make sure that your purchases fit in well with your monthly budget.
- Do not give in to the tactics employed by the credit card companies by offering cash advances. They will send checks in your mail but will never clarify it to you that these are mere cash advances. When you use it, you run into the risk of accruing interest immediately which will be much unlike any regular credit card purchases.
- Look for the grace periods when you make any credit card purchase and try to pay off the balance within this time limit or else you will have interest accrued in a compound rate. However, cash advances do not usually have any grace periods and will result in an automatic fee charged from you that can be as high as 4% on the amount advanced.
- Using your credit card to pay off medical bills that can be overwhelmingly expensive can add on to your woes, especially if you are uninsured. Incurring the exorbitant credit card interest rates is not worth. You will be better off when you negotiate with your medical care provider to reduce your bills or waive your interest or any other.
Lastly, do not ever ignore your debt. This is a bad approach because the more you ignore the more interest gets added to your outstanding balance as per the terms of the credit card agreement. For all such situations, negotiating with the credit card company is the best approach to get a better deal.