Karlocompare’s Best Credit Card Tips
Having a credit card can both be a blessing and a curse depending on how you use it. It can either be supplement to your income and help you take on expensive purchases such as a new AC or vacation tickets or it can be a debilitating debt from which there seems to be no relief.
KarloCompare believes that owning a credit card can be wise if you follow the below tips:
- PAY YOUR BALANCE IN FULL:
If you do not want to be the average person caught in the vicious cycle of debt, always spend as much on the credit cards as you can pay by the end of the month. This is the golden rule if you want your credit card to work for you instead of against you. The more time you take to pay your bill the more interest you accumulate and the interest compounds so that an PKR 2000 purchase can become a PKR 6000 bill.
If you are unable to pay the full amount, pay as much as you can. Avoid the minimum amount pitfall. If you can afford it, make some payment during the month as well.
- NEVER PAY YOUR BILL LATE:
So, let’s suppose you are unable to make the full payment or even 30% of the payment at the due date, then make the effort of paying the minimum amount at least. A bill that is paid late not only carries a significant extra charge for late payment, but they also adversely affect your credit score.
A bad credit score means higher interest rate in the future and once again you enter the vicious cycle of accumulating debt.
A good way to keep track of your bill’s due date is to set a reminder on your phone or have standing order with your bank account to at least pay the minimum amount.
- KEEP TRACK OF YOUR SPENDING ONLINE:
One of the advantages of a credit card in comparison to cash spending is that you can track your spending online. Moreover, you can check what contributes to most of your spending e.g. you might notice that 70% of your spending is on dining out so you might want to control that expense.
Always check you credit card spending once a week. If you feel that you are reaching a limit that will be hard to pay at the due date, stop using your credit card immediately and do not use it till you are able to pay off some of the balance.
- USE YOUR Credit CARD FOR BIG PURCHASES ONLY:
We recommend using your credit card in times of extreme need and as a compliment to your budget. For example, if you need to buy a new washing machine and a cash payment of PKR 50,000 is not possible for right now, you can use your credit card and then follow a strictly implemented payment schedule. You will pay a little extra interest rate for the luxury of making the purchase immediately and using the product while you make the payments. Some banks also offer the facility of splitting your debt payments on 0% interest rate. However, if you choose this option make sure that monthly payments are also affordable for you since missing on those monthly payments would result in not only a late payment fee but you would have to pay two months’ worth of payments in the next month.
Using your credit card for big purchases only can also prevent the debt from “Sneaking up” on you. Spending PKR 200 everyday on Careem might add up to thousands of rupees in credit card debt if left unchecked.
- EARN AS MUCH REWARDS AS YOU CAN:
Finally, when choosing a credit card or if you already possess one, do your research on what discounts and offers you can avail. Almost all credit cards offer discounts at grocery stores, restaurants, e-commerce websites, fuel stations etc. Knowing and availing those discounts can help you save money and make the credit card a blessing rather than a curse. Many credit cards offer a points system where more purchases lead to accumulation of points which can be later used to purchase free or discounted products such as airline tickets. Again, if you are unable to pay the balance when the bill is due, the earned savings can be cancelled out by the extra interest charged.
Now equipped with these tips you can prevent falling victim to the trap of unending debt and enjoy the benefits of having a credit card freely.