Credit cards make it easy for your financial transactions, but behind all these conveniences, a big responsibility arises in their use. The responsibility in question is where your credit card can issue more than your ability, you are responsible for overseeing its use according to your financial capabilities. Chingachgook will describe some things that can be done and things that should not be done using the right credit card.
Create a Budget for Using a Credit Card
The use of excessive credit cards can produce bad long-term effects, especially if the bills are not immediately repaid. You can get very high credit card interest. Swiping credit cards continuously can have an ‘opium’ effect. Make sure you have a budget for how much you can pay using a credit card every month.
As a wise credit card user, of course you don’t want to spend more than your ability. Watch your credit card utilization to avoid credit card bills that accumulate. In addition, you should limit the use of credit cards so they don’t exceed 30% of your limit. This will help you build a good credit score .
Read the Terms and the Billing Sheet Carefully
Don’t underestimate the provisions provided when you take a credit card. Make sure you read all the provisions, especially regarding costs so that there is no misunderstanding in payment. In addition, you must also read carefully the bills obtained every month. Not infrequently credit card users become victims of fraud so they must pay bills that are not used.
Bill Evaluation Every Month
Credit card companies are well known for the habit of charging hidden costs to consumers. Therefore, make sure you always read the rules given both at the beginning and every new change in your credit card. That way you can always get the best deals.
Keep Using the 30% Budget Rules for Debt Repayment
In the management of good cashflow you are advised to allocate a maximum debt repayment fund of 30%. Make sure the use of credit cards and other debts that you pay every month is no more than 30% of your monthly income. That way there are no accumulated bills that cannot be paid.
Negotiate Credit Interest
Credit interest is usually very high, if bills are stacked over time it can damage your finances. Try to negotiate your credit interest, especially if the interest on the loan offered is higher than the previous credit card. There is a chance the bank will offer more attractive offers.
Determine the Payment Period for Monthly Cashflow
Everyone can get different bill payment periods. We recommend that you determine the payment date according to your monthly cashflow . That way, when you receive income you can immediately complete all bills. So that no bills accumulate.
Use Your Credit Card Strategically
A good credit score from using a credit card can open a big loan approval opportunity for you. Use your credit card for routine needs such as paying for electricity, telephone, internet, and other bills. That way, credit cards continue to be used every month without making you wasteful.
Don’t Late to Pay Bills
One of the factors that has the biggest influence on your credit score is bill payment history. If you are late or do not pay monthly bills, the impact can be very negative on your credit score. Make sure you pay credit card bills on time and the right amount.
Don’t Leave a Credit Card Bill
There is indeed an option to pay part of a credit card bill every month. This does not affect the credit score, but it will get you in a high credit card interest. It’s best to pay off your credit card bills every month.
Don’t Pay Minimum
Just leaving a credit card bill is not recommended, let alone paying the minimum bill. The more bills you leave, the greater the nominal interest you have to pay in the following month. Don’t let this damage your cashflow in the long run.
Increase Payment When Closing a Credit Card
If you intend to close the old credit card then you must pay off all previous bills. But don’t forget to pay more than the bill to cover administrative costs. You can overestimate around IDR 10,000 or according to the needs of each bank.
Don’t Use a Credit Card More Than Paying Ability
This is one of the most important points. Don’t use credit cards more than you can afford. Credit cards are debt, not extra money, if you continue to stack it can have a negative impact on your finances.
Don’t Use Credit Cards for Non-Permanent Purposes
Credit cards can be used to buy many things, but it should not be used to buy necessities that are not fixed in nature. For example, to buy items that you want. This is because the number of unwanted items is usually unlimited. While the credit card can accommodate it right then and there, you may not be able to accommodate credit card payments in the following month.
Don’t Have Too Many Credit Cards
Having too many credit cards will only burden you with annual administration fees. In addition, it can also open up opportunities for you to buy items that are not needed just because of various promotional offers from various credit cards. You should have a credit card that offers facilities to suit your needs.
Use a Credit Card Correctly
Credit cards can be useful and not detrimental if you use them properly. But credit cards can also be a source of financial disasters when used carelessly. Enjoy the benefits of a credit card without forgetting some of your responsibilities.
Do you know the dos and don’ts of other credit cards? Leave your comment below . If you have questions, please submit your question in the column below. Our Financial Planner is ready to help you, thank you.