Collaborative Post¦ Most of us put off taking credit cards out. At the end of the day, if you’re financially responsible and don’t run into any unexpected costs, there really isn’t any need for a credit card. You’ll be able to fund your own purchases with your own money that you have stored away in the bank. But when it comes down to it, credit card use is essential in the wider financial world. Especially if you want to take out a finance plan on something like a car or a large scale loan such as a mortgage later down the line. When it comes down to it, large scale lenders want to see how you manage debt and repayments. They want solid proof that you will meet repayments on time and stick to terms and conditions. The only way to prove this is to take out small scale loans and repay them properly or use credit cards responsibly in the lead up to applying to your larger loan. So, here are a few ways that you can use your credit cards the right way and give yourself a good track record!
Interest Rates
When taking out a credit card, the first thing you need to do is look at interest rates attached to different options. This is essentially what the lender charges you for providing you with the money that you’re borrowing. You want to find the lowest interest rate available to you, as this means that you pay the debt plus a small amount of interest back to the lender. High interest rates will mean that you pay the debt plus a large amount of interest back to the lender. The lower the interest rate, the better the deal is for you!
Repayment Installments
Once you’ve taken a card out and used it, you will be expected to repay a certain amount on a monthly basis. It’s absolutely essential that you make this payment on time and that you pay the right amount. This will ensure that you get good marks on your credit file and that you appear to be a good borrower. Failing to pay on time can result in fees and fines. Many people will wonder, can you go to jail for not paying your credit cards? While this is unlikely, you can face court cases if you exceed your limit and do not make payments. It will tarnish your credit score.
Only Spend What You Can Afford
Of course, many people take credit cards out to cover unexpected costs that they cannot afford, or to help themselves get by when times are hard and income is low. In these situations, people have little choice but to spend more than they can afford. But if you’re simply using your card to improve your credit rating and be deemed an appropriate applicant for loans, you should never spend more than you can afford on your card. This is not free money and you will need to pay it back.
These are just a few suggestions that will help you to use your credit card responsibly. Keep them in mind at all times!
Disclosure: This is a collaborative post.