Your Credit Card and the Debt Traps

Kimberly Watson, Editor in Chief
September 04, 2012 /

A credit card is considered by many to be financial freedom, but the true perspective is that it could be the entrance fee to a variety of debt traps. If you have just received your first card then take note of some credit card tips regarding its usage.

In this day of economic awareness a budget for most citizens had become paramount. Therefore, a primary objective amongst credit card tips is not to spend more than you can afford. With your piece of plastic available for every whim, this could be difficult!  Therefore, do some financial planning and place a limit each month on your expenses. This should be about fifty percent of your designated credit limit and do not deviate from it.

Another gem for your credit card tip is related to financial control by tracking your spending. Arrange for your card provider to notify you by phone every time you use your card. You will be told the sum you have spent and the available balance on your card.

Setting limits includes rejecting incentives to increase your credit limit. Banks make money from you using their money. Your card provider would initially set a credit limit for you based on your income. If you are tempted to increase this amount to fund your lifestyle, remember that you have will have to pay the account. Your credit tips therefore include, not increasing your limit until your wages increase significantly.

Maintaining a credit threshold is essential as is paying your card statement on time and in full to avoid extra fees. Your credit tips will tell you preferably to pay your account online because paying cash will incur an added charge. If you pay the minimum sum due, then it will result in a roll-over, which incurs a higher interest rate. If this becomes a regular process, then your credit record could be affected, to your future borrowing detriment.

Take particular notice of one item from your credit tip, which is not divulging your credit card details to any one. This applies critically to the “CVV” number on the back of the card. Also remember, never to let the card out of your view, such as; in a restaurant or in any environment where your card is swiped. Skimming card information is a lucrative racket and could be extremely expensive for you as a victim!

Other valuable credit card tips include ensuring any online payments are made to a trusted and verified website and keeping track of your card usage with your statement record.  Avoid cash withdrawals with your credit card as they are considered to be cash advances and charged at a significantly high interest rate.  Use your credit card, but do not allow it to trap you!

 

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