Your credit card can be your friend or foe. The choice is yours.
Credit cards are very useful especially in today’s fast-paced environment. Essentially, using a credit card is an expedient way to pay for a purchased item. A single swipe enables you to bring home the stuff you want, even when you don’t have cash with you to pay for it.
While your credit card may incur you extra charges in the form of interests if you default in your payment, it also offers some interest-free payment schemes for big purchases you make. For example, you can avail of a zero-interest installment plan when buying home appliances. You can’t easily do that without a credit card.
For others who have credit cards, the temptation to use them during shopping is almost always irresistible. It is fine to use a credit card to buy items or pay for services like utilities, but a good sense of personal finance management and control is necessary to ensure the timely payment of obligations.
A good financial IQ dictates that you use your credit card wisely. You cannot spend all your money paying credit card debt. And you have to have enough money to spend for daily living expenses and to pay your monthly dues. Unpaid credit card balances can wreak havoc on your finances.
To avoid the hassles of mismanaging your credit cards and defaulting on payments, follow these simple tips.
1. Use cash, not your credit card, for your ordinary purchases.
Using your credit card for all your regular grocery shopping and other ordinary purchases could lead to unwanted debt, as this buying spree can make you lose control of your spending.
Better use cash or debit card when on a shopping spree
You might think that the small interests your bank charges you won’t really hurt much because you have your next paycheck coming, anyway. These interests, however, can pile up; and delays in payment can lead to a growing—and unmanageable—amount of payables. Using cash limits your spending and does not pose the risk of accumulating interests, unlike credit cards.
2. If you are shopping online using your credit card, make sure that it is a secure site.
When shopping online, paying through your credit card is not only expedient but practical. Just be sure though that you shop on sites that are secure and have features that protect your credit card details. Better yet, only buy from reputable online shops and those already established in the e-commerce industry. Search the internet for reviews or possible scam cases.
3. Don't be lured into buying something you cannot afford.
You have to realize that having a credit card does not give you the unbridled liberty to spend on things you cannot really afford. Unthoughtful credit card use has negative financial consequences.
Do not spend beyond your means to avoid incurring credit card debt
If you buy something expensive that is beyond your current means, it is likely that you won’t be able to pay the full amount within the interest-free period. If your paycheck is not enough to cover the monthly dues, your delayed payment will incur you interests that will make future payments even more difficult to manage. And soon, you’ll find yourself buried in debt.
Be realistic with what you can really afford. A credit card is not a magical shopping wand that can give you anything you wish for.
4. Have a credit card shopping accountability partner.
If you are aware of your tendency to spend beyond your limits and use your credit card excessively, then it is best to have someone you trust who can provide you with a check-and-balance advice, and help you monitor and control your spending. Get an accountability partner.
Find someone with a good financial IQ who can give you an honest assessment of how you’ve been using your credit card. And when you’ve found a good partner, listen and be open to doing some control measures before it’s too late.
5. Make a list of the items you need to buy and align your budget with your capacity to pay.
Make a shopping list aligned with your budget to control your spending
If you are really short on cash and need to use your credit card badly, make a list of items you need to buy and nothing more. Make your monthly expendable income your basis for your budget and stick to it. Prioritization is key.
In the end, you have to know that your credit card is a strict lender. Yes, it lends you money that you have to pay back, with strict policies and schedule to abide by. It’s not your money you’re spending when you swipe that card on your shopping spree. When you keep that in mind, you should be more responsible when you shop.