It’s easy to whip out a credit or store card to pay for something, but knowing what you will be paying in interest is vital if you do it all the time. Here are some tips to make sure you stay on top of things.
One of the best ways to manage a larger purchase is to apply for a card that will give you 0% interest on your purchase for a fixed length of time. But, if you aren’t careful you can still end up paying more.
You don’t have to be stung with high interest rates if you make the effort to keep track of your cards, though. Of course, it does get trickier the more cards you have, but in reality you only need to spend a few minutes a week working out your situation. And, once you know where you stand you will be able to carry on paying the smallest possible amount.
For starters, take out all the cards you have and match them up to your regular statements. Each statement will tell you the exact rate of interest you are paying on that balance. Now if you have a card that you use regularly but always pay off in full every month, you don’t need to worry about the interest rate at all. The most important thing will be to find one that gives you a bonus for using it, such as points off your next purchase.
And if it helps, write the relevant rate for each card down on a small sticky note and stick it onto each card. That way, when you go shopping you will be able to easily select the best card for your purchase.
If you are trying to pay off outstanding balances however, you might need to change cards to ensure you don’t pay any more than you need to. The thing to bear in mind here is that switching cards can incur a fee. This means you need to work out whether it will be cheaper to pay that fee and switch to a permanently lower interest rate now, or simply stay where you are and pay off the balance as quickly as you can.
Whatever you do, it’s vital not to make a knee jerk reaction and start applying for lots of other cards at the same time. This can look bad on your credit report. Instead, look at your financial picture as a whole before you make any firm decision.
In the end,
credit cards can work very well for you – so long as you know where you stand with your interest rates. And provided you do your homework before you make any firm decisions, they can be a valuable part of your overall financial strategy.
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Adam Singleton writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.
