Thursday, 27 February 2014

How Credit Cards Work For You?

Credit cards are great, and they can be awful!

If you do not handle them correctly, they can cause huge financial difficulties. However, if you deal with them in a sensible and controlled way, they can actually help you with your finances. Here’s how.

If you have a credit card, then you should use it. The more you use it, the more your credit rating and score will improve. However, the key is, to only use it for amounts you know you can repay. And this is where it can be difficult.

Credit cards are like magic plastic tickets that pay for things, and we don’t need to worry about it until the bill comes in! If you clear the balance on your card every month, you will keep the charges down and increase your credit rating and score. But if you don’t the costs will rise and the amounts get larger.

Here are some examples of how to use a credit card to your advantage:

Many people use a Tesco credit card to buy fuel for their car. They earn points on it, repay it every month so avoid interest charges, and it boosts their credit rating. Although this may not be the best option for everyone, it does illustrate a way of using a credit card to save money, improve your credit score and benefit from loyalty points, which are the equivalent of money too.

Problems with credit cards only occur when they are used to make purchases beyond the means of the card holder. This is easily done, and often it can be very tempting when shopping online or out and about in town. The truth is that to own a credit card, you need to be responsible and strict with yourself. Credit cards are not as easy to get as they once were, and this is probably a good thing. Unfortunately the economic climate has made getting credit almost impossible. The good part about it is that it has forced us to learn how to live without credit. It’s not easy but it is possible, and much cheaper.


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