Nowadays, almost everybody has a credit card and enjoy the comfort of being able to buy things instantly. However, it can go overboard, especially if you have a spending habit. There are things you better pay for on your debit, and there are things that are healthy for your credit score. So I hope that after reading this post it will be more clear what are these times when you should borrow.
When You Know You Will Be Able To Repay It In Full
I wholeheartedly believe that the minimum amount that they allow you to repay instead of the full amount is the trap to get you paying interest in the end of the interest-free period. This is also one of the most reasons why so many people end up with unmanageable debts – check Money Saving Expert for the details.
If you borrow money on your credit card – make sure that you repay it in full at the end of the month. This might mean that you’ll have to move around some of your cash in that period and budget for that. After all, this is not free money and should be taken full responsibility for.
When You Face An Unexpected Large Expense And You Don’t Have Enough In Your Emergency Fund
I don’t mean to confuse you here, but as much as you want to buy stuff that you can repay at the end of the month, you also should use your credit card when you need to pay for things that are too big for your wallet. Although you should always have an emergency fund for big expenditures like this, or some other type of savings.
Unfortunately, due to the virus a lot of people ended up draining their emergency funds and so borrowing can seem like the only way out. If you do need to pay for something expensive with your credit card – I would suggest that you speak to a financial coach or planner to repay it as soon as possible.
When Booking A Holiday
Since credit cards are protected by the Section 75 of the Consumer Credit Act, buying with a credit card can help you if your flight will be cancelled due to a collapse of the holiday provider. It is an insurance you can’t get in any other way.
Although be aware that the could be an overwhelming amount of different credit cards. When choosing which one to get, I suggest that you search for comparison websites that will help you to get a closer look at which one would be the best for your holiday. As always, keep an eye for that small print when choosing a credit card!
Once In A While
Credit cards are one of the most expensive ways to borrow money. Even if it is your interest-free period it is best if you don’t buy with your credit card too often. It is the habit of spending that drives so many people into a bad debt. ‘But that never will happen to me!’ – better be safe than sorry. Start cultivating a healthy relationship with your credit card from the very start and surely you’ll never end up in that situation.
However, if you don’t use your card for too long, the provider might deactivate it. So I suggest to use it at least every two to three months to keep it running.
Thank you for reading this post, I’ll be back to you with more money wisdom’s for artists tomorrow!
Sign up to never miss a post or a freebie: