When you successfully manage your credit card, it can be a useful budgeting tool. As many people are facing financial hardship in 2020, we suggest taking a cautious approach when choosing a new credit card.
Limits, fees, penalties and rewards are all factors to consider. The final decision should be made based on your lifestyle requirements, shopping habits and income. To make this process easier, we have compiled a list of our top credit card tips for 2020 (and beyond):
Know Your Limits
When your credit card limit is excessive, it can be easy to spend money that you don’t have. Before agreeing to a spending limit, you should be honest with yourself about how and when you will be able to pay it back.
Just because you can have a large amount, it doesn’t mean it will be right for you. A credit card can help you manage your budget and pay your bills on time, but without discipline, your debts can quickly grow. If you have recently suffered a loss of income due to the COVID-19 pandemic, you can speak to your credit card provider as they may be able to offer lower spending limits and advice.
Choose the Right Rewards
One of the advantages of owning a credit card is the rewards. There are a few options available, and the details will vary between plans and companies. If you choose to earn points when you spend, you can redeem them on different goods and services. These rewards could include airfares, accommodation, merchandise, cruises, charitable donations or cash.
Each credit card will have a unique rewards program, with extra points offered in dedicated categories. For example, you might receive bonus points when dining out, grocery shopping or filling your car up with gas. For those who prefer cash back, find a credit card that offers a percentage back on all of your purchases.
Stick to a Budget
You need to know exactly where your money is going, and a strict budget can reduce the stress associated with managing your finances. A credit card can help you pay your bills on time, but if you miss a deadline, you could see high fees and interest.
When you choose a credit card, find one that suits your spending habits. For example, those who are committed to regularly paying off debts on time could benefit from a rewards program. People who carry a balance may be better off with a low-interest credit card without the extra bonuses. Remember, keeping your balance low will save you money on interest and charges. If you can stick to a budget and make regular payments, you will be less likely to encounter large debts.
Read the Fine Print
When looking for a credit card, you should always read the fine print. Introductory offers can have limitations, with high-interest rates and fees once the initial period expires. Find a reputable provider who will protect you in case of fraud or identity theft, and offers you full-service transparency.
The Final Say
Remember, a credit card can be beneficial when used correctly. When you manage your finances and choose the right solution for your shopping habits, you could get on top of your bills and start saving.
It can be tempting to accept a high spending limit, but for those who get tempted easily, this could lead to future debt. Whether you want rewards, cashback or a low-interest rate, there is a suitable credit card available.