The 8 rules of credit cards
There are some things to consider before getting a credit card, and some good strategies for managing them.
1. Shop around for the best deal: credit cards come with varying interest rates, fees, and rewards programmes. Take time to select the credit card that best suits your circumstances. 2. Know the interest rate you’re paying on your credit card: many credit cards charge high rates of interest, which can prove expensive if repayments aren’t met. 3. Review your credit card limit: base your credit card limit on how much you can afford, not how much you might spend. If you think you will have trouble paying it back, decrease your limit. 4. Pay the balance off in full each month: you can only take advantage of interest-free days if you pay the balance in full at the end of the month. If you can’t afford to pay the balance in full, at least try to pay more than the minimum repayment to save on interest costs. 5. Don’t use your credit card to withdraw cash: Don’t withdraw cash from your credit card – banks charge high fees for this. Cash you withdraw attracts a high interest rate from day one. 6. Be wary of accepting a higher limit or additional card: If you let your bank raise your credit limit, or give you another credit card, you increase the risk that you’ll end up paying interest. Also credit cards usually have an annual fee, so the more cards you have, the more fees you pay. 7. Avoid temptation: If you can’t resist the temptation to spend more than you can afford, leave your card at home. That will give you time to weigh up whether your purchase is essential or just nice to have. 8. If you’re in trouble, talk to your bank: If your credit card is getting out of control, talk to your bank about options for clearing your credit card debt. You may be able to take out a loan to pay off your credit card and pay off the loan at a lower interest rate.