How to use your credit card wisely

Credit cards provide a flexible and convenient way of borrowing money. However, the cards can easily turn into debt traps if they are not used properly. The following tips will help cardholders get the most from their credit cards, be they local or international.

Card Usage
Credit cards are used in three primary ways:

• Withdrawing money from cash machines
• Moving outstanding debts from other cards
• Making straightforward purchases

These three uses incur different charges. Consider what you will often do with your card and then choose the one that will charge the lowest percentage. You should preferably avoid making ATM withdrawals because they incur the highest interest rates without providing any interest-free period.

Rewards
Many credit cards come with different rewards. While rewards are great, many of them require people to use their cards frequently. If you are looking for cards with rewards, then ensure the rewards are relevant to you. For example, there is little use in taking a frequent flyer credit card if you hardly travel. You will be better off with a card that gives you cash back offer instead. Alternatively, you should consider cards with lower limits instead of rewards.

Avoid the urge to spend more simply to get a reward.

Repayments
You will show that you are financially responsible when you pay off your credit card balances quickly. A good way to achieve this is to budget money that is more than sufficient to cover the required payment every month.

However, do not pay off the balances immediately after using your credit card. Wait for the provider to send you a statement and then make your payment, as this gives you the opportunity to improve your credit score because you will build a good payment history.

You can set up direct debit payments if you may forget your monthly payments.

Spending Plan
One of the drawbacks of credit cards is that they tend to encourage people to make impulse purchases. However, you can easily avoid this trap by preparing a budget and using your card to fit the budget. Stick to the budget as closely as possible to ensure you can always cover the required payments. A great card to start using is the Green Dot Credit Card, which shows its international and local benefits and features on the Green Dot Facebook Page.

Timing
You can schedule the charges on your credit card to give you longer statement cycles. For example, you will be required to pay any charges made on your card a day prior to the closing of your statement within 20 to 25 days. If the charges are made a day after closing of your statement, you will have 30 more days to pay them without incurring any interest. This timing effectively gives you up to 55 interest-free days to make your payment. However, use this strategy only when you are in a tight financial situation.

Missing or Stolen Cards
If your credit card is stolen or lost, get in touch with your provider about the issue immediately. You are likely to be responsible for any charges on the card before you make a report. However, you will not be held liable once you have reported the matter.

Find more information on Green Dot Facebook page.

Tagged credit, credit card, education, repayments, rewards, time, timing, usage