8 Wonderful Ways of Using Credit Cards (Part II)

Have you read the previous post of the 1st 4 Wonderful ways of using credit cards? If you agree with the first 4, then read on and learn how to play the banks instead of letting the bank play you….

5. Use only 10% of yr credit limit

Avoid using more than 10% of the credit limit on your cards. So, it is to your advantage to have a few cards on hand with maximum credit limit to that you will have ample fund to use monthly. If it is hard to stay at 10%, you might want to apply for higher limit from your current bank. Here again, I wish to caution all on your self-control. Having higher credit limit and more credit cards may be a temptation to spend more. So budgeting is essential to make this point a plus for you.

6. Treat your credit card like a debit card

Because of the fear of overspending, some prefer debit cards, where the money comes straight out of their checking account. The problem here is, debit-card rewards usually aren’t as generous as credit-card rewards, and there’s less chance to earn interest because you are paying for your purchases right away. Two disadvantages of debit cards; Debit-card activity usually is not reported to the credit bureaus, so your prudence won’t earn you a good credit score. You have to pay before your purchases and you lose the 21-day interest free grace period of credit card. Therefore it would be to your advantage to have a change of mindset and to use credit cards like debit cards.

7. Take advantage of interest-free instalment plan.

Take full advantage of the 9, 12, 18 or sometimes even 20-month interest-free instalment for large purchases. Some banks charge a fee for such plans, that is why you have to choose the best credit card company to avoid these charges. Buy all your electrical items or large need-to purchases in shops that has interest-free instalment plan tied in with your credit cards rather than paying cash for such purchases. Put your cash into a saving plan to earn you money.

8. Play the banks - don’t let the bank play you.

When your credit total comes to a certain big amount, and you have been a good paymaster, chances are you will receive a call from your credit card bank to offer you a non-collateral personal loan. They usually play with numbers offering interest rate as low as 0.58% per month as compared to credit card interest rate of 1.5%. It may sound very tempting but don’t be fooled, the interest is calculated on the lump sum and does not offer you the reducing factor like as if you are paying back your credit card debt where the next month interest is normally calculated after deducting what you have paid. At the end of the day… you may end up paying more interest including charges like administrative fee of 1% etc. etc. So look before your leap.

In order to take full advantage of using credit cards, you will have to have a very good self-control and manage your spending carefully. My advice: have your monthly budget carefully planned out and ensure that you keep to your budget.

BE BOTHERED

Some people are not bothered at all when dealing with their daily expenses. They felt that the reward point systems are a big hassle but mind you, if you change your mind set and take the bother to get all your necessary expenses to be auto-debit into your credit cards, you will actually save yourself a lot of time and stress and you will enjoy the rewards (earn back money) as well. So “BE BOTHERED” - IT IS WORTH IT!!!