On Your Credit Card Statement What Is A Finance Charge Credit Cards – A Good Servant But a Bad Master

You are searching about On Your Credit Card Statement What Is A Finance Charge, today we will share with you article about On Your Credit Card Statement What Is A Finance Charge was compiled and edited by our team from many sources on the internet. Hope this article on the topic On Your Credit Card Statement What Is A Finance Charge is useful to you.

Credit Cards – A Good Servant But a Bad Master

Most of us use credit cards regularly to manage our daily expenses. Here are some principles to keep in mind when using plastic.

Rule 1 – Always pay the balance in full each month

It seems like a simple thing, but it’s surprising how many people I’ve come across who have outstanding balances on their cards that accrue interest at an alarming rate. The best way to avoid this is to set up a direct debit from your daily bank account that deducts the full payment on the due date. This is not a widely used feature so you may need to ask your bank for the form. Paying off your credit card via direct debit will also ensure you maximize your interest-free days (see rule 3).

If you are having trouble paying off your credit cards – then you need to spend time preparing a budget and monitoring your cash flow on a weekly basis.

Rule 2 – Always check your credit card statement

If you’re like me, your credit card statement runs to a few pages or more and it’s often hard to remember what you spent money on. Compounding this problem is the fact that the name on the credit card statement bears little resemblance to the seller! You can sit down with your spouse over a glass of wine at the end of the month and tick off each line on the statement. However, my preferred method is to categorize each entry on a credit card on a weekly basis using cash flow software that dynamically downloads all transactions. It may seem cumbersome but once you get into a routine, you will feel in control of your finances.

Rule 3 – Make the most of interest free days

This is a great gift from the bank. Most credit cards have a maximum of 55 interest-free days and this should be a key criterion when selecting your card. Only purchases made on the first day of your credit card cycle will qualify for the full 55 days interest free. So it may be worth the time to make several large purchases early in your credit card cycle. This strategy is especially useful if you have a mortgage with an offset account so the money in your account is saving interest on your home loan. But, if you pay even a day late, banks retroactively charge interest for the entire period. You lose interest free days. Therefore, always ensure that you pay the balance in full on the due date.

Rule 4 – Reward points are great

I don’t have the space here to discuss all the pros and cons of the various credit card rewards programs. Suffice it to say that the best solution is to keep it simple. Personally, I accumulate points on my card that can be redeemed for almost anything including; Myers, Apple products and flight center dollar gift vouchers. I usually choose the latter as it takes a big chunk out of the cost of a family vacation. There are others who prefer to direct their points to their frequent flyer program. It’s a good bang for your buck, but you’ll need to plan ahead to make sure there are frequent flyer seats available when you want to travel.

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