Tuesday, December 12

Credit Cards: Their Use and Managing Debts

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Credit cards are always referred as money in disguise. In simpler words, for people who tend to spend a lot, credit cards come to the rescue. Imagine a situation wherein you have shopped at a mall to your heart’s content and are about to make the payment but a fund crunch is disabling you from buying a certain product. At such a time, it would only be wise to swipe that dazzling card and return home happy and satisfied. And in a way, credit cards are effective to use, as you need not carry a huge amount of money in your pocket or handbag.

Though, things are not the same every time and again. Recently, credit cards have managed to stir up the financial positions of many of its users only because they found it difficult to manage their debt. With the use of credit cards, one must also learn the skills of managing money wisely. That does have very little to do with your spending until and unless you overdo and land up wrong.

Hence, in order to keep the hardships at bay, you must follow certain guidelines with which you can probably use the credit card sans hassles.

Avoid Misuse

First off, the main aim of any credit card user should be to refrain from unwanted spending. Use the credit card only when you feel the need to, for it cannot be exploited for any other reason whatsoever. Consider it as borrowed money which you have to repay and hence spend money it wisely.

Clearing Existing Debts

Most people end up taking fresh credits to satisfy previous debts. A wrong practice in itself, it not only does affects your ability to repay but deters the credit rating as well.

Setting Up Funds

As soon as you have planned your monthly budget, make sure you set aside some amount of money for urgencies. As there may be lot many contingencies to be disposed off, one should build up funds in order to meet with financial hardships.

Plan an Investment

One should try to make at least one investment per year. Also, make sure that the returns are good enough and can somewhat serve the entire purpose of investing funds. Popular investment options include long term as well as short term shares, bonds and debentures.

Depending on your credit card use, it can turn into your best companion or superlative foe. One should always keep in mind that the way the funds are utilized and debt is overcome, it all is well recorded in the credit report. Besides, the credit score and credit rating have an extremely close connection to the credit report, which eventually decides one’s financial position.

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