Many of us use credit cards for all sorts of different things and it is wise to be very careful when we are using them. There are some people that take advantage of them and manage to use them well so that they actually gain money out of them but there are others which do the opposite and end up being trapped by the cards themselves. It is worth understanding which technique you should be using with a credit card so that you can take full advantage of it and then thinking about whether a card is a sensible choice for you.
How to use a card
In order to take advantage of a credit card there are several things you need to do and a few things you can additionally choose to do. Firstly, it is crucial that you make sure that you pay off the whole of the outstanding balance on the card each month. The easiest way to do this is to set up a direct debit to pay off this amount when necessary. This will mean that you are totally in control of things. You also need to make sure that you only use the card for normal purchases, This means that you stay in control of your spending and do not buy more than you need just because you have a credit card to use to buy things with. Keep a constant track on the balance of the card as well so that you know you will be able to afford the repayment. Keeping aside the money that you would have spent had you not had a card is sensible idea. You could put this into a savings account to gain interest while you are waiting to repay the card and you will gain even more from it. You could even choose a cashback card which will give you money or rewards for using the card and you will get even more from it.
How to use a card
The worst way to use a card is to spend money on things that you would not normally buy or be able to afford. Thinking of it as free money that you can treat yourself with means that you could use it for all sorts of luxury items. Then if you only repay the minimum balance you will more easily be able to afford it. However, you will be paying interest on the remaining balance and this could be really costly especially if it goes on a long time. Also, if you pick a reward card it is likely that the interest rate will be even higher and so it will cost you as much or more than a conventional card. Once the credit limit is reached then it could be tempting to get another card and spend all of the money available on that as well; costing you even more money.
How to decide whether
to get a card
It is worth thinking about what type of person you are with regards to spending money. If you always keep a good track of your spending and only buy what you really need then a credit card could be suitable for you. As long as you are not tempted to use it to spend more than you need and you make sure that you keep track of what you are spending so that you know that you will be able to afford to repay it in full each month, then it could be well worth getting. You might even be able to profit from it.
However, if you are the type of person that spends all the money that they get and does not keep a close track on what they are spending then a card could be a very expensive choice for you. It could mean that you will get a lot of expensive debt and be in a situation where you get more and more cards and are in a situation where you cannot even afford to repay the minimum payments let alone the debt itself.
You should know what sort of person you are. You will know how you normally are with money and how careful you are. Think about the risks that you will be taking hen you take out a credit card and whether you feel that it is worth that risk. It could be very expensive and could end up in you getting a lot of stress due to debt and not being able to cope. However, it could end up with you being very much in control, gaining interest free credit for a while and even being able to get rewards and interest if you are careful with the card and use it to your full advantage.