Using credit in a way that benefits you

Credit cards can be a helpful way to manage your finances and earn rewards. Here are useful ways you can take advantage of its benefits. Read on to find out!

How do credit cards work?

Whenever you’re using credit cards, you're essentially borrowing money from the bank. If you don't pay off your balance in full every month, you accrue interest charges based on the money you owe as well as late fees, which may make it more difficult for you to repay your debt.

Reasons to use credit cards

Here are some reasons why using credit cards can be good for you.

• Paying with a credit card can help you earn rewards. Many credit cards offer points or cash back on your purchases which you can use to help reduce the cost of travel, groceries, or other expenses.
• Another advantage of using credit is that it can provide you a lifeline during an emergency. If you have unexpected expenses like a sudden hospitalization, you can use a credit card to pay for them and then work on paying off the balance over time.
• If you need to make a big purchase, such as a home appliance or furniture, but don’t have the cash on-hand, getting a loan can be a good way to finance these expenses.

How to use credit cards wisely

• Try to only use your credit card for purchases that you can pay off right away. That way, you won't have a balance carried over from one month to the next, and you won't have to worry about accruing any interest charges. While this isn't always possible, it's a good general rule to follow whenever you can.
• If you have an emergency expense, like a medical bill, using credit cards can help you pay for it immediately. However, it's important to be mindful of interest rates and fees when using credit cards, even during emergencies. You'll want to make sure that you're able to pay off the balance relatively quickly so that you don't end up paying more in interest than you need to.
• If you’re using your credit card to make a big purchase, make sure you will be able to pay off in the future.
  

When you shouldn’t borrow or use credit cards

It's generally not a good idea to borrow or use credit cards on things you can’t afford. If you don't pay your bills on time, you'll end up paying more for the item than its worth through accrued interest. This also damages your credit score and makes it difficult to get approved for loans in the future.

In general, it's best to avoid using credit to pay for anything that isn't a necessity. If you can't afford to pay for something with cash, you may want to reconsider whether you can truly afford it at all.

How a credit limit can help

Your credit limit is a helpful tool you can utilize to make credit beneficial for you. Your credit limit refers to the maximum amount of money you're allowed to borrow from a lender. It's important to manage your credit limit carefully, as borrowing too much can put you at risk of getting into debt.

A credit limit can help you manage debt by giving you a spending limit. This can help you avoid borrowing more money than you can afford to repay. But don’t maximize your credit limit. It’s not a spending goal. Instead, think of it as something to help you stay within your capacity.

One way to stay within your credit limit is to only use your card for essential purchases. Another option is to set a budget for your credit card spending. This will help you keep track of your expenses and make sure that you don't exceed your credit limit.

A credit card can be a great financial tool to have in life, but only if you know how to use it properly. Try out these tips so you can use credit in a way that benefits you best.

Now that you know how to properly use a credit card, you can reap its benefits! Apply for a Metrobank credit card today.