MOST of us know the joy of swiping a credit card when buying – but there is no joy when we have to pay it back!
Wikus Olivier, debt management expert at DebtSafe, said swiping your credit card might seem like fun, until you get hit by the reality of your purchases and find yourself drowning in debt.
Olivier said before applying for a credit card, people should know why they want a credit card and what they want to use it for.
He gave the dos and don’ts of owning and using a credit card to help people manage their swipes and limit their debt.
- Know what the minimum payment is that you need to pay back.
- Use the card responsibly and make sure you are up to date with your payments. This helps improve your credit score.
- If you want to use your credit card for loyalty benefits, use it like debit card – only when you have actual cash in it.
- Pay more than the minimum payment every month – don’t only pay the minimum or “ rent” your account demands.
- Always ask for your credit agreement and make sure you understand it BEFORE signing. What is the minimum payment? What is the interest rate? What are the other fees and charges?
- Only use your credit card for emergency situations.
Olivier also had sound advice for what NOT do with your credit cards.
- Never over stretch your credit card so badly that you cut yourself off from all other credit such as homeloans or car financing.
- You may get offered exciting loyalty points or rewards when you use your card, but these are just shiny lures to tempt you to bite. Use credit wisely and avoid excessive spending.
- Don’t miss a payment – you will pay extra in late fees and knock your credit score.
- Do not exceed your credit limit as you will need to pay penalty fees. Once you exceed your credit limit, it becomes very difficult to bring the balance down.
