Credit card is a most expensive piece of plastic a man can have. For this small plastic is one of the most expensive products. Credit card must not by any means be the primary means of survival. The interest on credit cards goes up to incredible 30 %.
Add that to the annual membership fees, cash withdrawals fees or the conversion to other currency our card expenses will definitely be a big unpleasant surprise for us. Here are 3 golden rules on how to use credit cards.
Rule # 1 –Plan
Planning consumption within the household budget and keeping the track on spending is one of those rules. As difficult as it might be to survive the entire month with a paycheck, planning on spending and buying is what saves us all from spending what we do not have in our wallet.
Unplanned purchases in order to satisfy your need to afford yourself some luxury usually will cost us much more than what we realistically can pay. At the same time, keeping records of consumption of a credit card is the first and main thing that everyone needs to learn.
Regardless of the “benefits” that the credit card has to offer, remember that at the end of the day, you still have to pay off those benefits, so do not go over your budget.
Rule # 2 – Do not buy food or household items by credit card
Although credit cards are not a check upon which you can write a due date, this same rule applies as with checks. Buying food you’ll pay months after repayment with small percent of the amount is a trap from which it is difficult to get out. Remember that the bank or credit cards do not offer their services without their own interest.
Rule # 3 – Do not use a credit card as an easy access to cash
Although you can withdraw cash from credit cards, this is the most expensive option of using the card. The credit limit is subject to the payment of interest the bank that is one of the most expensive in the range of banking products.
At the same time, the model of calculating the minimum amount for payment implies that the total consumption includes the membership fees, maintenance, as well as fees for cash withdrawals at ATMs or bank counters.
This model of course is done with the calculation of interest, because the interest is calculated on the unpaid portion of the debt, so that when all is summed up, withdrawing the cash from the credit card is much more expensive than say cash that we spend if we take the cash loan.