Credit Card Advice 
To Manage Your Money Wisely

Credit card advice usually comes from financial advisor's and money gurus. Well i am nether but i have been a great advocate for frugal living for many years and so feel that what I learnt does have merit in this department.

It is usually quite boring and involves lots of facts and figures about various different types of credit card and all the different interest rates.

They also try and tell you what is the best credit card for you.

Well I have learnt that there is no such thing as "a best credit card".

No, there is only the best credit cardFOR YOU and the only person who can decide that is YOU

So I won't be telling you which card to use to look after your money, instead I will be giving you all the tools to understand credit cards for yourself, so you can decide if a credit card is right for you. P.S I will try not to be too boring…

What is a credit card anyway?

Cards you will normally carry are either a debit card or a credit card. Lets talk about both to see the difference.

The Debit Card - this card works very similar to a cheque. You pay for something using your debit card and the money comes straight out of your bank account.

You are not charged any fee for using the card and there is no interest to pay, just like a cheque.

The Credit Cards - this is like running up a bill. Every time you use the card it adds the amount to a running bill, then at the end of the month the bank asks you to pay it.

However you can either pay off the whole amount all at once or pay off a portion of the amount, the remaining bill will start to incur interest charges until it is paid off.

By not paying off the full amount you will be paying off more than you originally borrowed on the card. So my credit card advice is, if possible, pay off what you owe every month to avoid interest fees building up.

The interest rate of a credit card is set by the provider of that card i.e. the bank that issued the card.

The companies that actually handle the transaction do not make any charges to you and the only difference between them is whether or not they are accepted in the country or shop you are using. Two of the most well known transaction companies are Visa and MasterCard.

My credit card advice is to make sure that your credit card is accepted where you usually shop the most.

If you are travelling abroad check with your transaction company before you go, it may be necessary to take out another credit card just for your trip if your card has limited use in your destination and this may take several weeks to set up, so plan ahead.

The benefits and disadvantages of a credit card

If you use a credit card in a frugal living way it has many advantages over a debit card.

  • It delays actual payment, allowing you to manage your money.
  • It provides payment protection and sometimes protection on your goods.
  • Some have reward schemes the more you use the card.

However the main disadvantages of a credit card is:

The interest you pay on outstanding balances is very high and if you do not stay on top of your card usage you can quickly build up a very expensive debt.

So my credit card advice is to always set yourself a limit on your credit card usage and once that limit is reached, put your card away until it is paid off.

The worst thing you can do is to keep your balance near to this limit as you will be incurring ever increasing interest charges which may mean that you are only paying off the interest rather than the actual bill.

Continued - More Credit Card Advice

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