Credit cards. To do or to be avoided at all costs?
Here is a list of 5 things you may or not already know – but should – about that tempting piece of plastic.
1. Never, Ever Take Money out of an ATM with Your Credit Card.
Such a bad move. You’re stuck for money, and whilst your bank offers you the option of withdrawing cash from an ATM, otherwise known as a cash advance, it’s not advisable. It might sound like a great way to get out of a tight spot, but it isn’t. Take our word for it. Apart from being charged huge fees on credit card withdrawals – around 5% -, the APR can be as much as 25% effective immediately (no grace periods here), so even taking out a payday loan is a better choice when push comes to shove. Consider other options first.
It doesn’t look too good to the bank or other lenders, because cash advances means you’re desperate and it’s unlikely they’ll want to join the party. Your credit score won’t thank you, so ask a friend to help you out for a few days until you’re back in the black, before punching in that pin number!
2. Don’t Carry a Balance and Pay More Than the Minimum Payment.
It won’t be news to you that missing payments is not a good plan.
There are huge costs associated with not paying credit card debt on time, but there is nothing more frustrating than paying good money into your credit card, with a distant hope of being credit card free before long, only to find that far from chipping away at it, you are only paying the interest and the debt itself remains intact, and worse still, it’s growing by the day.
Commit to paying over the minimum and rid yourself of debt sooner.
3. Boost Your Credit Score!
Weirdly, you can be better off to have had a credit card that not, despite thinking they’re better left well alone.
Having been considered worthy of credit will go on your record and prove that you’re a safe bet down the road when you need a loan of any kind.
Willpower is key here, because having credit in your purse or wallet might be tempting! Don’t spend money that you can’t pay back. Easier said than done? Lock it away, sit on your hands, bury it, but don’t go on that shopping spree! Leave them at home, at very least.
4. Pick the One That Does What You Want It To
Yes, we want a credit card to help get us out of a money fix, but they do way more than just that. Gain Air Miles and eventually free travel or upgrades, avail of travel insurance offers and cashback incentives so you can actually make money, or shopping vouchers and loyalty schemes galore.
Do your homework to make sure you are getting the best deal, just in the same way you would with any loan, mortgage or line of credit. Some offer interest-free periods to give you a head-start paying the money back; this is well worth considering because, as mentioned above, the interest can be a killer!
5. Read the Small Print
As with everything, don’t let anything escape your attention. Make sure the deal is one you can keep up with for the duration, and that there’s nothing hidden in the conditions that they might spring on you later!
If it’s the first time you’re signing a credit card contract, maybe have someone help you go over it before signing.