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How to Effectively Manage Credit Card Spending and Improve your Credit Score

September 28, 2017

Credit cards have been around for a long time, and they provide a convenient way to purchase goods or services, yet there are very real dangers of overspending. The “buy now-pay later” syndrome can suck a person in, and before they know it, those lovely gadgets now have to be paid for, and with spiralling interest as you fall behind, you are soon in what is known as the credit card loop, which means you are borrowing money to pay bills. Credit cards must be treated with respect, and many young people feel empowered, knowing they can just walk into a store, hand over the plastic, and walk out with the goods.

How to Manage Credit Card Spending and Improve your Credit Score

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Card Management

One must understand that using a credit card cost the same as paying cash, with the exception that you have some time to pay, but pay you must, and in order to avoid credit card debt, you need to exercise a high degree of self-discipline. Set yourself a monthly budget for food, transport, and other things, and before you reach for that plastic, ask yourself, “Would I buy this if I had to pay cash now?

Read the Small Print

When a person signs up for a credit card, there are reams of technical terms and conditions, and if you do not fully understand the implications of certain practices, you can easily get into deep water. There are articles online that highlight the importance of reading the small print, which applies to any agreement a person might enter into. If you fully understand how the system operates, you are less likely to do anything that might lead to credit card debt, and being informed empowers you, especially when you move on to investments, as a financial crisis is not the end of the world, and most recover and move on to better things.

Check your Credit Score

There are reputable sites where you can check your credit score for free. The credit score determines the risk factor from a lender’s perspective, and certain debts are removed after a specific period of time. If you know your credit score, you are in a position to improve it, and there are a number of ways to do that.

Clear Debts

Repaying any outstanding debts will have a positive effect on your credit score, which happens to be what every lender is looking at, and it doesn’t take long for the debt to be removed, then your score is also improved, and that could be the difference in a mortgage application. Sometimes, patience is the best policy, and after certain bills have been settled, you would be in a better position to apply for that home or car loan.

Careful spending is the key to successful personal finance management, and with the credit card comes a level of responsibility, which enables the user to benefit rather than suffer. Your credit score is critical, and by knowing what steps can be taken to improve it, you are in a better position, should you ever need a loan.

Contributed by Katrina Fernandez

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