The credit card can be a boon or a bane. You can avoid problems if you are a prudent shopper. However, it is also easy to get into debt with credit cards owing to carelessness or getting mixed up. These are things that you need to be very careful of. Avoid getting over the limit so stay away from impulsive shopping.
Come up with a budget before going to the supermarket or making large purchases. This precaution can save you from future problems. Refrain from accumulating debt that you cannot afford to pay on time. Remember that a small mistake can lead to exorbitant interest charges, additional penalties and dents on your credit scores. There are also some scenarios that you must avoid.
- Using the credit card for cash advances is a mistake that you will definitely regret. Interest rates on cash advances are significantly higher compared to daily purchases. The truth is the rates of loan sharks are even lower. Rates usually reach as much as 21 up to 24 percent. - Paying hospital bills is another big no. Medical billers usually offer payment plans for patients especially for large invoices. Terms are relatively reasonable. You can even choose an extended payment plan and with zero interest. Thus, there is really no need to sue the credit card for this.
- Allowing friends to charge purchases on your card is not a wise thing to do. Just imagine if the person defaults or becomes tardy in making payments. The interests will be too heavy to bear. Worse, you end up paying for the debts of other people.
- Late payments can be your biggest thorn. Consequences can include enormous interest rates and subsequently, lower credit scores if you are one month overdue. APR's can go up to a high of almost 30 percent while late fees will be three percent of the unsettled balance. The solution is to pay your dues right before the cut-off schedule.
- Paying just the minimum can prove to be a big mistake. If you settle the minimum balance every month, it will take a lot of time to settle your obligation. Increase your monthly payments and finish everything faster. Check out your statement carefully so you know the amount that should be paid to get rid of your liabilities.
The credit card can be a big advantage for you. Just make sure that you use this financial instrument wisely.
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