If you use a credit card in the right way, they can actually be a good money saving option. Able to cut the cost of your shopping, improve your credit rating and offering good borrowing rates, if you’re money-savvy you might find that having a credit card can keep you on the right side of your bank balance.
As always, when using a credit card, use it responsibly and don’t borrow what you can’t afford. Using a credit card the wrong way could leave you with a poor credit rating and some expensive debts.
Don’t withdraw cash
Interest is immediately charged on withdrawals from ATM machines, buying travellers’ cheques, purchases of currency, placing bets and electronic transfers.
You could end up paying a lot for the sake of instant cash, but not for purchases.
As a general rule, it’s best not to withdraw cash with your credit card.
There are some credit cards that offer a 0% money transfer, but most will charge interest if you transfer money from a credit card account to a bank account. You can weigh up the pros and cons like this by checking comparison websites. It will also cut out a lot of the hassle that you may face if you are unaware of the charges.
Keep tabs on your spending
Don’t use your credit for frivolous spending – it’s advisable to only use it for emergencies.
Many people spend a little and pay this back each month as a way to help them build up a better credit rating.
In any case, keeping your spend less than 80% of the available credit will leave you with a buffer. This may also make you attractive to lenders of other financial products, plus will leave you with a little for an emergency.
Make sure you keep an eye on your bills at all times, so you can pinpoint if fraud has taken place or when a mistake has been made.
Set up a direct debit to keep up on your monthly payments. This is the easiest way of making sure you’re paying back what you need to when you need to. With most credit card companies you can choose one of three options to pay back, either the full amount owed, the minimum payment or a specific amount that you choose (as long as this is more than the minimum payment).
Having a credit card can help you build a better credit rating if you use it wisely and avoid the temptation of spending for the sake of it.