Credit Management: Being Responsible With Your Credit Card Debt

financial management concept

Every hard-working professional knows that having a credit card can come in handy in many situations. Whether it’s going to the restaurant and celebrating with your friends, getting that brand new phone that you’ve always wanted, or unwinding at a resort after a long week, there’s no doubt that credit cards can get you what you want.

Although credit cards can work for you if you can effectively manage your finances, many individuals are unsure how to manage their finances, and much of their debt has gone out of control. Here are some ways to use your credit card effectively and make it work to your advantage:

Start Paying in Full

There’s no problem in only paying a minimum amount for your balance, right? Well, this can inadvertently do more harm than good. Your priority should be to clear out your monthly balance as soon as possible. If you’re only making minimum payments that will get you out of hot water, for the time being, you’re only dragging on your debt for a longer time.

There’s a good chance that you’ll be charged more interest on your card. For instance, if you paid around SGD 149 for your balance, but you still owe around $150, there might be a chance that you’ll get the interest based on the whole $150. This is the last thing you’ll want to happen.

But this will entirely depend on the company that you’re going for and the terms and conditions you agreed upon. Still, debts can go out of control if you’re not aware of your spending habits.

What’s a good way to ensure that you won’t have to pay an extremely high amount? You can always apply for a credit card that’s tailored to your needs and wants without having a high interest rate. Fortunately, you won’t have to look far since there are convenient and hassle-free credit card promotions that can be specifically tailored to your lifestyle.

Checking Your Bills and Securing Your Information

someone handing out money

Another important factor that you’ll need to consider is checking your credit card statements. You must ensure that everything in your statement is authorized by you. If there’s something suspicious in your credit card account and you don’t recognize it, you’ll need to make queries regarding this activity to your bank. It’s also important to have receipts with you since this can be used as evidence for certain matters.

Luckily, recent advancements in automated technology have made it easier for you to check many of your banking and credit card statements online. This makes it a good idea to start checking your banking statements a week before when your payments might be due. This can help get in the proper habit to ensure that you have enough money to make full payments. Remember that making full payments is better than just making minimum payments that could lead to your accumulated debt dragging on for months and even years.

In addition to monitoring your account once in a while every month, you might want to store personal information, not in the same place where your card is stored. Instead, place your personal information in a secure area at home or in a safe where no one can have access. Moreover, it would help if you changed your PIN to something that you’ll remember or you’re familiar with. Most ATMs will allow you to change your PIN. However, try not to use your date of birth or something related to your personal information.

Avoid Withdrawals and Cheques

Contrary to what most people think, credit cards don’t operate in the same way as debit cards. Although you can withdraw money if you’re really in need of it, you’ll need to pay more fees in the long run, with higher interests than what you’re normally used to. Although you might be able to pay off your credit card debt, you’ll still be spending more than you have to, unlike making direct purchases.

Other transactions will have the same effect as cash withdrawals with your debit card. This will mean that they’ll have the same interest rates and the same charges when you make these transactions. This can include the following:

  1. Entering competitions
  2. Gambling
  3. Postal fees
  4. Exchanging your currency
  5. Paying through cheques

There are many things to consider when it comes to your credit card debt. But you shouldn’t be flustered in this situation since constantly paying your credit card debt help with your credit score. Managing your credit effectively is one of the best ways of ensuring that you won’t have any future financial problems. Remember that you can either let your credit card work for you or against you.

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