How to use credit cards as your key to being debt-free

Credit cards do not always deserve the predominantly negative reputation they have acquired. Here are ways you can benefit from them.

13:38 02 January 2014

Many times, we think of credit cards as the worst type of debt a person can have. The ideal debt load would be comprised of purchases such as mortgages and education, which would theoretically yield positive financial results in the future. Credit cards are usually the opposite of “helpful” debt. But credit cards do have their virtues.

Here are a few tips to help you get ahead with your credit cards.

• If you remember that credit cards are like loans - you can plan to pay your entire balance in the same month you use it to minimise the interest payments.

 

• Make sure you know about the interest rates on your credit cards. Many cards have multiple interest rates to keep track of which can be complex. Keep a notebook—especially if you have more than one credit card—with the different interest rates. You might have one interest rate for cash loans, another for balance transfers, and a separate one for purchases. There are also other types of interest rates, so be sure to evaluate your card agreement and ask the company about anything which seems unclear.

 

• Use special promotional balance transfer rates to pay off debt you have at higher interest rates. Not only will you get your debt paid off more quickly, but you may also be able to lower your minimum monthly payment as well.

 

• You can use smaller purchases to build a better credit rating. Purchases don’t need to be large, but you can make two or three months of payments to pay off a little purchase and you won’t be paying too much interest.

 

• As long as you try to use your card only when you will be able to pay the balance off within a month or two, credit cards can work well.