Being credit card smart requires you
arranging for payment within a month or next billing date
Credit cards have turned into an integral
part of modern living as they facilitate making purchases and paying bills without
carrying cash. They make life easy and help maintain a record of our expenses and help us
dispute charges for undelivered and defective things. In addition they enable us to earn
reward points. However, credit cards could make you overspend and get into debt. There are
nine ways that could help you to be credit card smart.
One can be very smart in playing a game
only when he knows the rules of the game very well and follows the same diligently.
Similarly to be smart with your credit card you need to know the rules of the credit card
usage. Let me unbundle the same for you.
1) Do not have many credit cards:
It is true that credit cards definitely
help in emergencies and facilitate payments. But having too many credit cards could tempt
us to overspend and get into credit card debt that could be difficult to recover from. In
addition it is best to avail of reward points on one credit card, so that you could encash
the points more quickly.
2) Cultivate and maintain an emergency
Most of us believe that credit cards can
definitely help in medical and unexpected emergencies, but it is unwise to consider it as
a general rule. A much better alternative would be regular setting aside money as an
emergency fund for such unexpected emergencies. This will prevent getting into credit card
3) Repayment capacity should determine
credit card spending:
It is right that using credit cards in
place of cash helps. But this applies to purchases that we can afford only and also repay
immediately. Spending more than what you can repay is highly undesirable and could get you
into credit card debt.
4) Avoid cash advance withdrawals:
It is best to live within your means and
avoid making cash advance withdrawals even in emergencies. This is the worst thing you can
do with a credit card. Having a smart spending plan will help you in not falling this
5) Avoid bank transfers without valid
Being credit card smart requires avoiding
making balance transfers from one credit card to the other. This will avoid payment of
balance transfer fees and getting into further credit card debt that could turn vicious.
However transfer of bank transfers like taking advantage of lower interest rates could
6) Make full payments in time:
Being credit card smart requires you
arranging for payment within a month or next billing date. Delay in repayment and minimum
payment could affect your credit standing and make you also liable to pay high rates of
interest that you could not afford. Not carrying any balance forward would relieve you of
stress of getting into credit card debt.
7) Understand the credit card agreement
Being credit card smart requires
understanding fully the agreement and other terms and conditions for use of the credit
card. This includes understanding transaction fees levied, interest rates, and when
increased rates for credit would be charged. This would help take precautions to avoid
getting into increased debt on credit cards.
8) Recognize the signs of credit card debt:
Many consider a credit card a boon and fail
to realise that they are getting into credit card debt. It is best to understand and
recognise signs like skipping a credit bill to pay another, avoiding credit card payment
statements, and charging more than your repayment capacity by purchasing luxuries. Failing
to cultivate and maintain an emergency fund could also be a cause. Once you recognise
these signs you can turn credit card smart.
9) Never lend your credit card:
Being credit smart requires not trusting
others with your credit card even if they promise to pay back in time. It is unwise
because you will be responsible for the debt and charges. It is quite possible that credit
card companies did not allot them a credit card because of certain adverse circumstances.