Improper use of credit cards will have some negative effects on our financial condition. Credit cards do offer a variety of interesting programs in shopping or fulfilling our daily needs. However, if you do not have careful financial planning and cannot control consumptive behavior, then using a credit card will further increase your debt burden. Therefore, this time, the BFI Finance team gave seven tips on how to use a credit card properly and correctly, in order to avoid default. A smooth credit card bill payment, it will also positively affect your credit score.
7 Ways to Use Credit Cards Wisely
1. Choose a Credit Card According to Your Needs and Abilities
The first way to use a credit card wisely is to choose a credit card that suits your needs. The bank offers a wide selection of credit card types that you can use according to your abilities and needs. If you feel that credit card ownership is more intended for shopping for daily necessities, then choose a credit card that collaborates a lot with merchants providing daily necessities or supermarkets. If you use a credit card more for traveling purposes, then choose a credit card provider that offers attractive programs with accommodation and travel services.
After you determine your credit card usage preferences, then you can determine the credit limit. The credit limit will ultimately be determined by the bank according to your regular income and expenses. The use of an appropriate credit limit is also required so that the use of your credit card does not exceed the monthly income you receive. So, use your credit limit wisely. Do not be tempted to increase your credit limit if your financial planning is not yet mature.
2. Pay Attention to the Costs That Arise and the Facilities Offered
After you review the types of needs in using a credit card, then you can consider the costs that arise in using a credit card. The fees that appear on the credit card consist of annual fees, late bill payments, interest fees, over-limit fees, and others. Make sure you know the percentage of each charge that appears on the credit card. Currently, several credit card providers have offered 0% interest installments, so they can ease the monthly installments for their users.
3. Take Advantage of the Promos Offered by Credit Cards
Frugality is the third way to use a credit card properly and correctly. Saving money this time means being able to take advantage of promos held by credit card providers. Use these promos in order to reduce your monthly expenses. The promo can be in the form of a percentage discount when shopping at supermarkets, eating at restaurants, travel costs, staying at hotels, and others. Or it could be by getting points that can be exchanged for certain benefits.
4. Paying Credit Card Bills On Time
Like mortgages and car ownership loans, credit cards also have rules for paying bills on time. If the user is late in paying his bill, he will be charged with fines and interest which will make the bill per month bigger. If the user is late in paying the bill, it will also worsen the credit score or SLIK at OJK. If the prospective debtor has a history of substandard payments, it will affect approval in applying for loans at other financial institutions. Therefore, always pay credit card bills on time!
5. Paying Credit Card Bills in Full
In addition to paying credit card bills on time, the right way to use a credit card is to pay the bill in full. Credit card providers usually provide a minimum payment of 10% of the total bill per month. However, this will give you the habit of “digging a hole and closing the hole” if the user does not have good financial planning. Paying the bill per month in full means that you understand and are responsible for all the consequences arising from using a credit card.
6. Avoid Withdrawing Money Through Credit Cards
Another feature that can be utilized from a credit card is withdrawing money just like using a debit card. However, its use is not as popular as debit cards. In fact, withdrawing money from a credit card is the same as taking a loan from a bank. It's different if the user takes money from a debit card because the user gets the money from savings that have been accumulated for a long time. Focus on using credit cards as a means of facilitating shopping and adding assets, not being a source of cash.
7. Limit Credit Card Ownership to a Maximum of 2
Although there is no limit on the maximum number of credit cards you have. However, it is recommended for you not to have and use more than 2 credit cards. If you can't manage your finances well, it is feared that you will add to the debt that has the risk of not being paid off. Also remember, costs such as annual fees, interest fees, and other fees will increase along with the number of credit cards they have. Limiting credit card ownership sufficiently and how to use credit cards wisely, it will certainly reduce consumptive behavior.
Those are seven tips on how to use a credit card properly and correctly. The key lies in good financial planning and how you control the urge to shop. If you manage the use of credit cards correctly, surely your life will not be burdened by when and where to pay debts on time.
In addition to getting a loan through a credit card, you can also get a loan through BFI Finance. BFI Finance provides loans for business capital, investment, and consumptive purposes. You only need to guarantee the BPKB for a car, motorbike, or house certificate, then you will have the opportunity to get a loan with a low-interest rate and a fast approval process. You can also get loans ranging from millions to hundreds of rupiah depending on the assets you guarantee. Come on, submit your financing immediately through BFI Finance!
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