5 Tips For Enhanced Credit Card Management

Credit cards provide us with additional financial flexibility and provide us with the ability to defray emergency expenses, but they can wreak havoc on our personal budget and lead to severe personal debt. Those who would prefer to keep their personal debt to a minimum and maintain the proper personal budget can read on to learn more.

1. Formulate a Repayment Plan

If you've accrued a fair amount of personal debt because of your credit card spending, it is time to formulate a repayment plan. Credit card related debts do not have to take away your financial freedom and when you find yourself falling further and further behind, it is time to contact your credit card provider and put together a repayment plan that is mutually beneficial for both parties.

2. Check Your Credit Report Regularly

When you are creating a personal budget each month, it is important to have a working knowledge of your credit report, so that you can plan accordingly. Fortunately, you can obtain a credit report from one of the three main providers for free. This allows you to check your credit report every four months, at no added cost. When fraud takes place, it can go unnoticed for several months by the credit card issuer. The responsibility of remaining vigilant on a regular basis belongs to the card holder.

3. Prioritize Payments

When we do not prioritize credit card payments, this allows the amount of interest owed to grow exponentially, making it difficult for card holders to chip away at the principal amount owed. By paying off your credit card debts in a timely fashion, you can eliminate personal debt and ensure that your credit score remains satisfactory. If you have the ability to make larger than suggested payments, speak with the credit card company and make sure that these additional payments are going towards the principal.

4. Research Your Rates

In many instances, a credit card holder allows themselves to be enticed by the low, introductory rate that is offered by the credit card company. While low interest rates can be enticing, they are usually not the norm. A company may offer a certain rate as a teaser, only to raise the rate dramatically once the introductory period has passed. The higher the interest rate, the higher the balance, so be sure to educate yourself.

5. Differentiate Between Needs and Wants

Credit cards should never be used to make frivolous purchases, especially when you do not have the cash in your account to cover them. If you are using credit cards for creature comfort purchases (clothes, dinners out, etc.), this is a sign that you need to mend your ways. After all, who wants to foot the interest bill for a dinner that was eaten months ago or clothes that you no longer wear?