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Best Ways to Use a Credit Card

Credit cards can be useful financial tools that provide a variety of benefits, or debilitating financial crutches that result in devastating debt—all depending upon how they are used. While most individuals currently use or at some point will use a credit card(s), few recognize or understand the importance of safe and calculated usage before it’s too late.

To help anyone who is currently using a credit card (or will use one in the future) make the most effective use of the financial tool, let’s take a look at the best ways to use a credit card!

For Emergencies

A credit card is great to have in the case of an emergency. From a medical mishap to a last-minute travel arrangement and everything else that requires funds but isn’t planned, there’s something inherently convenient—and reliable—about having a way to pay for the unexpected.

However, it’s important that anyone interested in having a credit card around for emergency use only make use of it during actual emergencies—otherwise, when something unexpected does happen, the card may not be usable!

For Large Purchases

From a new television to a dishwasher and a great deal of big-ticket purchases in-between, having a credit card to use allows for an additional (and often interest-free, initially) amount of time to pay off the principal of the purchased item. Although many are able to afford these sorts of items, paying the total of purchase in-full will often create financial instability. Accordingly, this is one of the most common reasons that credit cards are used. Cards are often offered by the actual store where the purchase is being made, as well as credit card companies; regardless of where the card comes from, it’s recommended that one understand the rates and fees that are associated with it.

To Transfer Debt

New credit cards are excellent ways to reduce the total cost of other debt, by transferring these costs to a new and temporarily interest-free card.

As most credit cards offer a 0% introductory interest rate for the first year or so, many financial situations are greatly improved by transferring some or all of a high-interest debt to one of these cards—allowing for less interest paid, and equally as important, all of the payment(s) going towards and reducing the debt’s principle balance.

In addition to the normal ins and outs of a credit card, one should monitor for a potential card’s “transfer fee”—that is, the percentage of the credit balance that is charged to the customer for transferring it from one source to this card. Although many cards won’t have this fee, others will—but that’s not necessarily a deal breaker. One will have to judge whether or not a transfer makes sense in his or her particular financial situation—with respect to the credit card which the debt will be transferred to.

The above credit-card use methods are sure to help anyone interested in the financial tool benefit from it—not be financially harmed. Remember that each credit card, with the sleek looks and encouraging banking advice aside, are just that—tools. Just as one wouldn’t abuse tools used to complete outdoor work, he or she shouldn’t abuse tools used for financial work—there’s a risk of being hurt, physically or financially!

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