Money management has become an important and integral part of everyone’s lifestyle. The way that we save and invest our money defines what our future would look like. Also, it helps us better prepare for unforeseen economic crises. Saving cash in a jar is not just an old school but also not a smart way to manage money in modern times. Don’t be afraid of using the bank’s card. Instead, learn a few smart ways to use a credit card.
Credit card explained
There are many financial products available in the market that facilitate planning and assessment of how well we are handling these funds. Of all that is available, one of the most readily obtainable and usable is Credit Card. Before you run to the bank and order one, please keep in mind a few smart ways to use a credit card.
A Credit Card can be defined as a payment card given to customers that allow the cardholder to pay for products and services. The transactions are on the basis of an agreement to pay back the sum used and accepted fees. The card is issued by financial institutions like banks which then have to be paid back by the customer for the amount outstanding for a particular period.
Credit score explained
Many people nowadays are facing difficulty in maintaining a good financial position when it comes to credit cards as the banks keep a record of all the payment transactions made. As a result, banks can asses how reliable to pay back is the client through a so-called Credit Score. Hence, this allows them to make decisions for lending in the future depending on how fast and consistently the user pays back. For a strong credit score and smart use of credit cards in the current era, consider those ways:
Smart Ways to Use Credit Cards
The grace period on credit cards
A credit card grace period refers to the time allotted to the client to pay back the amount that is owed. Every Canadian credit card has a grace period of a maximum of 21 days from the closing of the last billing cycle. So, the grace period ends 21 days after the monthly statement is issued. To avoid unnecessary interest rates on the amount spent for this month there is a golden rule that should be followed: set a pre-authorized payment from the chequing account for the entire balance. Therefore, you no need to worry about missing the due date and being charged a high-interest rate. It’s good to remember that interest rate charges on credit cards due to late payment are completely unnecessary, simply because they are significantly high and cumulative over time.
Read all charges included in the contract
Credit cards typically have different charges such as minimum payment, registration fee, and late payment charges. The charges can, however, vary depending on added services. Hence, before you decide on one, you should compare rates from different banks. Consider also looking at so-called “hidden charges” like online transfers fee, atm withdrawal fee, or else. In the end, choose the credit card offers that best suit your needs.
Usage and purpose of using credit card
A credit card allows you to borrow money from the bank to make a purchase. The usage of such cards should be limited to your needs only. It should not be overused if you can’t afford to pay back. However, making use of alternatives like debit cards is also a good idea. You can use a debit card for daily transactions and use a credit card as an emergency only. Either way, credit cards can be really useful and part of your life if you. Choose the one that will help you, not be a burden on you.
What is your experience with credit cards? Please leave a comment or share it with us on our Instagram account.
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