Getting a credit card a pretty easy thing for everyone in the present world. Making a payment with a credit card is became quite common. While you make a purchase with your credit card, know that you have the cash for it to pay later. some times you may need to cover expenses on credit, such as emergency or unforeseen expenses, but using a credit card shouldn’t be a habit.
Owning many credit cards and not having an idea about how to use them will definitely land you in hot water. Failing to have knowledge of how these credit cards work can often result in massive amounts of debt, where you can’t find a way to repay them.
These below tips will avoid you landing your self in many credit card debt.
Buying Non-essentials with many credit cards
This will be on the top list to land yourself in hot water with credit card debt is buying things you don’t need. Having a credit card doesn’t mean that you afford any luxury thing without worry to pay cash for it. But later it will dump you into serious credit debt. You can make your credit card as an option that will save you from emergencies and things that cannot be paid off right away.
The main way you can avoid buying non-essential is to think before is it really important for you to buy it. You can avoid this by making a list of your purchases in a month. And see how much money is going toward unnecessary purchases, this will definitely realize you how your spending and careful with future purchases.
Maxing out your credit cards
If you have a credit limit of AED 30000, it doesn’t mean you need to spend all the amount in a given period. Maxing out your credit limits is the worst thing you do. Many banks and credit card provider are often come with high interest when making a large expense with your credit card.
Damages your score
Maxing out credit cards will eventually drop your credit score. The more you maxed out, the more your score drops. If you go with a low credit score to the banks to apply for new credit, you will be disappointed with their rejection on your application. Banks or financial institutes will look at your score for credit approval. If you continue to max out your credit cards your account will be closed.
High Annual percentage rate
Maxing out credit cards leads to a high annual percentage. If your APR rises your interest rate increases, makes you difficult to repay balances. When you continue to max out credit cards, some banks will not close your account but will raise the APR to a maximum of 40% for a minimum of six months.
So maxing your credit cards is not recommendable, but there are times where you cannot ignore it. If you are new to get a credit card to know about what is credit limit and at what interest rate is the card is offered.
Try to spend card low , Smaller charges are easier to pay off than a large sum with interest, don’t miss out on payments. At least pay a minimum amount and pay rest as soon as possible to avoid interest in keeping the charge relatively high.
Minimum Payments, Interest and Paying Late
A credit card is a perfect tool or a backup when you need money in emergencies and you don’t have the cash to pay to make some important purchases. Using a credit card wisely will benefit you in many ways but once fall into credit debt it will end you up with high APRs and possibly closed accounts.
Ignoring to make payments on a credit card is a big mistake which will end up you have a late payment. Late payment incurs you fees tacked onto the payment due. Longer you wait to make payment larger you pay interest on it. making it harder to pay off. So pay at least a minimum payment and if possible make multiple minimum payments to pay the card off as soon as possible.
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