Credit cards are the financial tools that may help you achieve your goals and objectives. Therefore, it is important to stick to a budget and avoid overspending using your credit card. Every cardholder should use their credit cards sensibly and cautiously or they might pile up debt and end up in a debt trap.
Planning your finances is extremely important to avoid compiling unnecessary debt on your account. An individual should always create a budget and stick to it sensibly. Financial status and comfort should be two factors guiding your credit card budget.
It is essential to develop a disciplined approach whenever using your credit card to spend shopping online or at POS terminals. In this article, we have provided you with some tips to help you control your credit card expenses.
Here’re 7 essential tips to control your credit card expenses:
#1 Pay Your Outstanding Dues In Full
You should always try to pay your outstanding dues in full and avoid making a partial payment. The reason for it is when you make a partial payment, you are already being charged with interest on the outstanding amount. Paying your credit card bills on time not only saves you money on interest and late fees but also improves your credit score. Payment of credit card bills on time has a beneficial impact on your credit card account.
#2 Set a Monthly Spending Limit
Make sure to determine your net monthly expenses before making any credit card transactions. You must develop a budget for how much you will spend using your credit card. Your budget should not be unrealistic and should have a proper balance based upon your needs and requirements.
If you have a tight budget, then you should restrict your expenses towards necessities and avoid any unnecessary expenditure using your credit. Therefore it is important to use your credit card responsibly or you might end up in a debt trap. Setting up a spending limit on your credit card shall help you limit your transaction using a credit card.
#3 Don’t Exceed Your Credit Limit
You shouldn't embark on an all-out shopping spree just because you have a credit card. You should be extremely cautious when using your credit card because you will have to pay for it in the end. As a result, you should not spend beyond your means if you know you won't be able to pay it back and will wind up in debt.
The Credit limit offered to you by the banks is directly dependent upon your credit score. Higher the credit score higher will be your credit limit. When you spend beyond the credit limit stated by the bank, you get charged over-limit charges that severely affect your credit score.
#4 Use Your Reward Points Wisely
A reward is a specific incentive system offered by banks based on your spending. Special incentives and perks can be obtained through these rewards when you use your credit card.
It is vital to make intelligent use of the bank rewards programs. Banks offer these rewards in form of cashback, points, or miles.
For example, if a credit card offers 5% cashback on utility bill payments. Then, paying your utility bill payment with your credit card shall be a good option.
#5 Setting Up Alerts On Your Credit Card
Setting up alerts on your mobile phone whenever you use your credit card complete transaction is a useful method to keep your credit card expenses in control. Whenever you use your credit card to complete a transaction using your credit card, you shall get an instant notification on your mobile providing necessary details of the transaction that may help you track your credit card spending habits.
#6 Reviewing your Credit Card Statements
It's crucial to maintain track of your credit card activities by checking your credit card statements. When you have many credit cards, keeping track of your spending is always a challenge.
Not checking your credit card bills can lead to debt accumulation, which can harm your finances.
It will also assist you in tracing any fraudulent transactions made with your credit card. To avoid any possibility of fraud or theft, it is critical to monitor your credit card accounts.
#7 Avoid Cash Withdrawals
You should always avoid making cash withdrawals using your credit card. When you make a cash withdrawal using your credit card, you get charged with a cash withdrawal fee along with an interest on the withdrawal amount that is different from the interest charged on your outstanding bill. Hence, you are recommended to avoid making any cash advances when using your credit card.
Bottomline
So, you can follow these tips as provided above to control your credit card expenses. You can easily manage to control your credit card expenses if you keep the above mentioned points in mind. Furthermore, you can also apply for no annual fee credit cards. As they help you save more and get better value out of your credit card.
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