Robert Kiyosaki said: ‘People used to live from pay cheque to pay cheque, now they live from credit card payment to credit card payment.’
For most of us, that’s a difficult statement to argue.
Rather than being a convenient means to pay, more and more people use credit cards as an often unaffordable way of borrowing.
But credit cards don’t have to be the mean, scary monsters we turn them into. Whether that’s replacing your home’s cheap carpet or splashing out on endless takeaways and nights out, a little wise thinking means you can not only use them wisely to your advantage, but to make them work for you too.
Pay off your credit card bill on time every time
Pay off your credit card bill before your payment’s due date. Credit card companies usually allow a period of 30 to 50 days before they begin to charge interest on the bill.
Better still, if at all possible, pay it off in full each and every month. Failing to pay in full means you’ll start incurring compound interest too. This is something you really do not want.
According to The Money Charity, credit card debt averages approximately £2,500 per household. Late payments rack up extra charges to an already rising credit card bill, so paying them down quickly and on time will make a big difference to reducing your debt and saving money over the long-term.
Many credit cards offer reward schemes for using them. This is where it pays to get wise. Using your credit card and clearing the balance each month means you can rack up points, air miles or earn other incentives, just for using it to cover your usual spending such as your grocery shop. Remember though, don’t incur late payment fees and always pay off in full to get full advantage.
Keep watch on the interest rates
How many of us know exactly what interest we are being charged? I’ll guarantee that if you don’t, you are not alone.
Keep a close eye on your bank’s interest rates and compare with competing credit cards. If you have good credit, open a new credit card with a lower interest rate and transfer your balance over.
However, and this is very important, do not keep your original card. Cut it up, close it down and forget about it. What you do not want is to rack up countless credit cards each of which becomes maxed out over time.
Remember, use credit cards for good.