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How to Use Your Credit Card Wisely – Tips from Our Financial Planners

When people talk about credit cards, there is often a lot of uncertainty that surrounds the topic and understandably so. They are a tricky thing to understand and, if not used wisely, can result in overwhelming debt.

However, there are some benefits of a credit card which our financial advisors came together to discuss, and we will share them in this article.

how to use a credit card wisely in south africa

Credit Card Tips South Africa – How to Use a Credit Card to Your Advantage

Before we get started on the potential benefits of using a credit card, here are a few important things to remember about them:

  • Interest grows – It’s not uncommon for your interest rate to grow in relation to the size of your debt. The more interest you accumulate, the more overwhelming your debt becomes
  • Credit is not free money – Credit cards give you access to funds that you may not have right now, but remember that you still need to pay that money back so be sure to swipe wisely
  • It all adds up – You don’t need to spend big for you’re the amount you owe to accumulate. In fact, sometimes the smaller amounts add up faster because you don’t really keep track of them. Stay mindful of these small amounts before they become too big to handle

Now that we have the warnings out of the way, here are some ways that a credit card can work to your advantage:

It Can Help You Build a Healthy Credit Score

If you are diligent with your payments, you can use your credit card to build a healthy credit score which will earn you some additional benefits such as lower interest rates in the future or easier access to loans. However, the key here is regular, timeous repayments on your credit card.

It Can Save You in Times of Need

A credit card can assist you in emergencies if you don’t have an emergency fund in place, or if your emergency fund does not fully cover the unexpected costs. Use it to pay for a sudden vehicle breakdown, an unexpected illness, or medical emergencies. But remember to pay this off as fast as you can. Also – fancy holidays or home makeovers are not emergencies.

They Offer Grace on Interest

Most credit cards offer an interest-free grace period. This means that there is a period before the interest rate kicks in and, if you pay off your credit card before, you can enjoy interest free payments. This is not available on all credit cards, so be sure to check this before you sign on the dotted line. Also remember, that all credit cards come with annual fees which are separate from interest rate, and you are obliged to pay these.

It’s Universal

Generally speaking, credit cards can be used anywhere in the world, as long as there are credit card facilities. This means that should you be somewhere far from home, and you run into an emergency, you can use your credit card to bail you out of trouble. This can also help you save on expensive currency exchange rates.

Olemera – Financial Planners in Johannesburg

We know that the idea of having a credit card can be scary, and rightfully so. Without the necessary discipline, credit cards can get you into a lot of financial trouble.

However, with the right guidance from our financial advisors, you can manage your credit card well, using it to your advantage.

We offer a comprehensive range of financial services, including personal financial planning which addresses smart debt management and saving strategies.

Comments are closed for this post, but if you have spotted an error or have additional info that you think should be in this post, feel free to contact us.

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