Using Credit Cards Wisely


Most consumers have a few different credit cards ? some are from banks and others from stores and shops, but all do the same things ? they buy stuff. While it is always fun and exciting to purchase the things we need and want, often we can go a bit ?overboard? and end up with a big pile of debts.

This is an issue that can be resolved, but it takes time and effort to accomplish. The first thing to do is put away any cards that are being used too often. As silly as this might sound, many financial experts have noted that people who must retrieve their card from a filing cabinet, lockbox or even from their bank?s safety deposit box are far less likely to use their credit accounts unwisely.

The next thing to do is make an itemized list of all outstanding debts, and then gather together monthly statements to see which credit accounts are charging the highest interest fees. It is the account with the highest rate of interest, not the highest balance, which should be eliminated first.

Have lots of low balances on a variety of store credit cards and accounts? Shop around for a consolidation offer from one of the bank cards and then roll the various store accounts into a single payment. Be aware of the fees or percentages that each traditional credit card company will charge for a balance transfer as these can often add up to a hefty amount.
Once all of the smaller sums are rolled into a single account, direct all of your effort at eliminating this balance as quickly as possible. Of course, this consolidation offer might come with a very low interest rate, and if this is the case, simply continue eliminating the higher rate credit accounts first, and then the lower consolidated balance.

A great trick that many people use to whittle away at balances is to make arrangements through their credit card company to have the minimum payment automatically deducted from their bank account ? this is usually referred to as auto-pay and most credit cards offer it to their customers. At the same time, many people schedule an automatic weekly payment through their bank?s website as well.

For example, a cardholder schedules a weekly payment of $25 through their bank?s bill pay feature, and also schedules ?auto-pay? through their credit card company. This means that they?re making the minimum payment, but also paying an extra one hundred dollars against the balance each month. Obviously, this can eliminate a balance very fast.

Using credit cards in the modern era is somewhat different than it was more than twenty years ago. Today, a cardholder can use credit to consolidate debt, take cash advances and even pay ?everyday? bills while earning bonus rewards or points. This is great news for someone who can pay off their balance quickly because they will end up with very low interest payments.

If a cardholder is unable to quickly eliminate the debt they are carrying on their credit cards, however, they may be overwhelmed by the interest fees and unable to reduce their balances in an efficient manner. While avoiding the use of credit accounts is the best way to avoid such debt, in the current economy, more and more people are relying on their credit accounts to simply ?make ends meet?.

One way that the heftier interest rates and bank fees can be avoided is by using credit only to make purchases or consolidate debts, and not for cash advances. This is because the rates for purchases tend to be roughly half that of the rates for cash. For example, a consumer might be paying around 9% on their purchases, but up to 30% for a cash advance. Simply using credit cards for only the lower interest rate functions is the wisest choice.

What if cash is needed? The easiest and fastest option is to take a payday loan. These are available from many online sources, and the best providers can usually have the cash in the borrower?s bank account in one business day. A payday loan or cash advance will have a short repayment period, which keeps fees and interest payments to a minimum. Most providers also allow their customers to adjust repayment schedules to meet their financial needs, which is not often a feature available for those using credit cards for advances.

Using a payday loan for a cash advance requires no credit checks and customers are never penalized with higher rates or fees because of a low credit score. Additionally, the sums available through a payday loan can vary from very small amounts up to $1,500 to $2,000. Such a loan can really save a consumer from over using their credit accounts to make ?everyday? purchases or simply to get by, and a loan repayment can be easily worked into a well-organized budget as well.