With the current recession, owning a credit card has become a huge liability. Shrinking income, increasing expenses, ever rising debt, and the threat of unemployment hanging overhead means that one has to be very judicious in his credit card use.
Here are a few tips to get the most out of your card and reduce debt:
1. Late payments are a big no-no. Credit card companies make their profits mostly through the huge penalties thecreditrepairblueprint.com/10-credit-card-tips-holidays/ they charge you for late payments or any other minor infraction. Late payment fees can be huge – as high as $40-50. Moreover, if you pay your credit card bill late, you could see your interest rate go up by a few notches. Not the ideal situation in this economy.
2. Make as much of a payment as possible. It is tempting to pay off just the minimum amount due, but it just means that you will have to pay a higher amount at the end, courtesy of the interest. If you have extra money in the bank, don’t hesitate paying off as much as you can afford to.
3. Practice restraint when shopping. In this holiday season with huge discounts everywhere, it can be very tempting to whip out the credit card and go on a shopping spree. Most of the times, people end up buying things they neither need, nor can afford. Resist the urge to shop for frivolous things. Buy only what you need if you are on a tight budget. Being frugal with your shopping is a habit that is difficult to acquire, but can be very beneficial to your financial health in the long term.
4. No matter what you do, never take cash advances. A cash advance is the easiest way to become a citizen of debtland. The amount of interest charged on cash advances is borderline criminal. If you need cash, borrow from a friend, but never from the credit card company.