Top 7 Tips for Using Credit Cards

1. Avoid paying debt at 17%

Credit cards can be very useful if you are able to pay off the balance. However, when you start paying interest at 17%, the advantages are easily outweighed by the very high interest payments. Therefore, always seek to pay off the balance and avoid these rates of interest. These are the best strategy’s for avoiding paying credit card debt interest.

• Avoid overspending. - Don’t get carried away, just because you are paying with plastic rather than cash.
• Transfer the debt to a lower interest paying loan like mortgage or personal loan.
• Don’t see credit cards as a way of borrowing. See it as a convenient way of borrowing.

2. Pay Electronically at latest date.

Many credit card companies give you up to 6 weeks to pay for your balances. When your statement arrives often you do not need to pay for 3 weeks. It is tempting to pay the account straight away. However, if you are short on cash, you can leave the payment until nearer the payment date. If you do pay close to the deadline make sure you:

• pay electronically for guaranteed payment (don’t rely on the post)
• Make sure you are not going to forget.

3. How to Deal with Missed Payment

If you don’t have a direct debit for minimum payment and you miss a payment by accident you should contact your credit card company as soon as possible. If you pay it as soon as you realise it may not incur a penalty for your credit rating. However, if is more than a few weeks late then it will count as a negative rating. In this case, the best thing to do is to try and challenge the negative rating. You could try write to the bank and apologise, saying it got lost in the post. If it is your first time they may agree to write off the negative credit rating

4. Use one Card for Collecting Points

Choose one credit card to put the majority of your spending on. It is best to choose a card that has an attractive points / reward system. This credit card you should always pay off at the end of the month.

5. Use 6 Month Interest Free offers

Many credit card companies seek to entice new customers through offering introductory periods of 0% interest. This can be very beneficial for consumers of credit cards. Personally I like to choose cards with 12 months interest free. They may charge a 2% balance transfer fee. But, this equates to only a 2% interest rate - you can probably get a better rate on savings. These 6 month interest free periods are ideal for dealing with periods of temporary cash shortfalls. It is a much preferable alternative than paying interest at 17%, the standard rate for some cards

6. Don’t overdo 6 month interest free cards.

It is tempting to take out as many interest free credit cards and invest the money elsewhere. However, I would definitely advise against this. Credit card companies are increasingly taking a dim view of people who do this. You may find it difficult to get cards in the future. The small gain of making 2% interest profit is not worth the negative standing with credit card companies.

7. Set Up Direct Debit to Pay Minimum monthly payment.

This means you will never miss the payment and is the easiest way to make sure you don’t damage your credit rating. Of course, you should try to pay the whole amount off. But, the main benefit of doing this is that you don’t need to worry about a missed payment which is very damaging for your long term benefit.

Related:

• Top 10 Tips for Reducing and Eliminating Debt
  
• Tips for Switching Credit Cards