Credit cards are the ultimate symbol of financial credibility, security and convenience. Credit cards allow you to make purchases without having to carry money. For many people who love to travel, a credit card allows them to go anywhere without worrying about currency exchanges and traveler’s checks. But the credit card has also become the ultimate symbol of reckless purchasing, uncontrolled debt, and ruined finances. But it does not need to be like that, explains merchantcardadvisors.com, a website that manages credit card payments and processing.

A credit card should help you manage your finances better

For some, a credit card is a tool that helps them manage their finances better. Like any other tool, a credit card’s effects depend on the knowledge and skills of the user. Those who chase the host of benefits associated with credit cards blindly, inevitably slip into debt. In fact, the Federal Reserve consumer credit reports indicate that in 2016, American consumers in credit debt were at $1 trillion.

But you can use a credit card without falling into the usual financial traps. Here are some strategies that can save you from committing these credit card mistakes.

Avoid credit card debt

Debt

A credit card should function as a cash substitute and not give you a high-interest loan. Customers who use credit cards as a cash substitute know how to capitalize on the cards grace period. The grace period is basically an interest-free period that you enjoy when you pay the outstanding balance by the due date. Although the interest-free period depends on the type of credit card, most credit cards come with a grace period of about 56 days. You can do the following to ward off high interests:

1. Only buy what you would if you had cash. Inability to pay up the balance at the end of the month is a clear indication that you’re living beyond your means.

2. Keep on top of payments so that you don’t pay interest. An easy way to do this is to have a weekly payment plan so that you can maintain the balances at a minimum.

3. Work with a budget. Instead of relying on your bank credit limits, avoid debt by creating a spending plan. A budget can serve as a guide to managing your finances.

4. Pay your cash advances on time. Credit card processing for payday lenders penalizes late payments. Late credit card bills payments attract penalty fees and can sometimes raise the interest rate to default rate. Depending on your lender, the default rate may sometimes mean double the standard rate.

When used irresponsibly, credit cards can send your creditworthiness into a downward spiral. This will happen when you have a high credit balance, miss payments or own too many open credit card accounts such that you can no longer track expenditure.   Credit cards are not meant to enslave you. In fact, credit cards, when used properly, can help you manage your personal finances.  To enjoy the host of perks that come with credit cards, determine why you need the card before you make that application.