Christmas is upon us. It is time to plan for gifts, family gatherings and travel. Just like Santa Claus and his Elves, planning is a must and a credit card can be an important part of your tool box. But beware of the Grinch who may steal the joy of Christmas.
At its core, a credit card is a payment tool. Using it as a financing tool, for long term objectives, can be very expensive and may lead significant financial hardship. Knowing this, how does one manage a credit card without being stripped of the joy of Christmas?
A few quick rules will help you avoid the hidden traps of credit cards. Follow them and you will avoid getting in debt, you will maximize your credit score and you will benefit from secure transactions.
- Use your credit card only if you are certain that you will be able to pay it back. Also, don’t buy something just to get bonus points or a small cash rebate.
- Make the full payment every month. This will save you from interest charges.
- If you can’t make the full payment, at least make the minimum payment. You will have to pay interest charges, but you credit score will not take a hit.
- Don’t max out your cards: a maximum debt usage of approximately 50 to 60% will help your credit score and will prevent unpleasant surprises at the cash register.
- One or two credit cards as enough for most. Stick to this rule and your budget will be just as easy to manage as your wallet will be lighter.
- If you lose your credit card (how is not important), let the issuer know immediately. This will protect you from unauthorized usage.
- Be careful: don’t give your card number to anyone and everyone, don’t input it to a website you do not trust and never share your PIN code or security code (the numbers on the back of the card).
If after following these rules, your credit card debt is still giving you headaches and is sucking the joy of Christmas out of you, it may be time to seek advice from a Licensed Insolvency Trustee at MNP. We will be able to analyze your situation and recommend a solution help you get a fresh start, free of debt and of the Grinch.
