Credit cards not only offer the benefit of convenience, they can also be a useful way to manage your money and accrue rewards when used responsibly. To maximize the benefits and avoid paying more than you need to:
- Establish a balanced budget that gives you a clear understanding of your incoming and outgoings every month. Use a budget planner to help with your planning, stick to the budget and don’t overspend. Be cautious not to spend more than you can afford to repay.
- Make sure you pay off your credit card balance in full every month, within the interest-free period. Set up an automatic transfer to pay off the amount owing on your credit card each month. This will avoid any extra charges and prevent you from falling behind on repayments and getting into debt.
- Use your credit card as an effective way to manage your cash flow. For example, if you need to pay a bill during the month but won’t have the funds until after the bill is due, pay it within the due date using your credit card. Then pay off your card balance as usual at the end of the month. By making both payments within the due dates, you’ll be in a better position to develop a good credit history.
- You can use your credit card to pay for everyday purchases each month. Many retailers, such as supermarkets, don’t charge extra if you use credit cards. Putting your everyday expenses on credit will allow you to keep cash in your savings account for longer, maximizing your potential to earn extra interest.
- Recognize that cash withdrawals attract additional fees. These may have higher interest rates than purchases, even if you settle your account on time. There is no interest free period for cash withdrawals.
If you’re looking for a credit counsellor in Toronto, get a quick assessment with us today or call us at 416.900.2324. We will help you develop a plan, reduce your interest costs and get out of debt over time.