Credit cards have become an essential part of our lives, people avoid carrying money with them. Instead, over a billion people in the world have one or more credit cards that they use on a daily basis in their lives, whether it's for online shopping, or paying for travel tickets, or monthly bills. Making payments, or buying groceries from grocery and markets, and many other daily uses.
According to Clearly Payments Platform, the number of credit card holders globally has continued to grow and is expected to reach 1.25 billion people in 2023, representing an annual growth rate of 2.79% from 1.1 billion in 2018.
Credit cards have become an integral part of modern shopping and financing methods, providing convenience and flexibility to consumers around the world. According to the latest report released by Custom Market Insights, the global revenue of the credit card market is expected to reach US$152.2 billion in 2022, with a growth rate of 9.1% year-on-year, and the total value is expected to reach US$286.5 billion by 2032. According to information reported by the famous British “Money” platform, this confirms the huge volume of credit card transactions around the world.
Three companies: Visa, UnionPay and MasterCard control the global card market. According to the Capital One shopping platform, the two together hold 96.8% of the market.
Many people use credit cards unwisely, putting them at risk of getting into debt and paying high interest on these cards. For some people, these cards are considered a new burden that haunts them in nightmares.
It is enough to know that according to the latest consumer credit data released by the Federal Reserve Bank of New York, the amount of debt owed to credit card holders in the third quarter of 2023 was $1.08 trillion in the United States alone.
Perhaps the most important question is how do we deal wisely with these cards so as to benefit from their many advantages while also minimizing their many risks and negatives.
On Al Jazeera Net, we present to you 6 ways to use credit cards wisely so that they become a blessing rather than a curse for their owner, as mentioned by many specialized websites and platforms.
1- Establish a payment strategy and stick to it
The first step to using credit cards wisely and intelligently is to set up a repayment plan and pay off the outstanding as soon as possible, and not allow the accumulation of debt on the card with paying high monthly interest.
The best plan is to pay off the balance on the card in full at the end of each month, rather than just paying the minimum amount allowable, as paying the minimum amount means paying higher interest on the remaining balance. , and these are cumulative interests that increase each month.
This may seem easy and obvious, but many people fail to do this, and end up paying high interest rates on their outstanding and accumulated balances month after month. This means you need to set a budget, and make sure you can afford the monthly installments and payments before you start using the card.
If you cannot pay your entire outstanding amount at the end of the month, you should at least commit to paying the minimum amount without any delay, so that interest and debt do not accrue to you, and secondly, So that your credit score remains fine. Not affected in long term.
2- Keep track of your credit card monthly expenses
If you do not pay attention to your spending then you may fall into the trap of debt, and here we advise you to carefully monitor the way you use this card, and do not use it except in cases of necessity. , and know that you have enough balance to pay what you owe on time, and avoid excessive unnecessary spending on your credit cards. Which you cannot repay later, and you have to pay high interest charges.
Tracking your credit card spending each month is an important step in understanding where your money goes, and how much you spend overall. Remember, interest will be charged on the past due amount starting from the date of purchase.
In this context, many credit card issuers have online portals or mobile applications that help you track your transaction activity and purchases. This can help you spot issues of overspending that you can correct. Ideally, your credit card balance should be low. 50% of your credit limit.
3- Never use the card to withdraw cash
Many people treat credit cards as if it is an open bank that they can withdraw money from all the time, and this is simply not true, as credit card loans are much more expensive than regular loans because of the deposits on them. Interest on loans is high. Them.
Here we advise you to never withdraw cash from the card, as the benefits of these withdrawals are huge, and greater than using the card for purchases. If you need money, it is advisable to take a personal loan at a low interest rate, or borrow from a friend or family member if possible, but never use a card to withdraw money except in cases of extreme necessity. Do not use. ,
4- Don't set a high ceiling for your cards
Many people believe that having a high credit limit on a card is one of its advantages, but the reality may be quite the opposite. Having a high balance on a card leads many people to spend unaccounted for, and here we recommend you adjust the credit limit on your card if it is high.
Ask your credit provider to set a reasonable card limit that will allow you to easily settle the payment before the due date. Remember that a high credit limit may lead you to overspend, while too low a limit may hinder important, high-cost transactions. It is important to set the right credit limit for you here; Not paying credit card bills on time can have a negative impact on your credit score.
5- Benefit from rewards and benefits
Credit cards typically offer benefits and rewards that can be used to save money on a variety of expenses, whether it's cash back, instant rebates on the total bill, free airline miles, or purchases at specific shops and stores. There should be a discount on purchases.
Here we advise you to understand the rewards program and the benefits inherent in it as soon as you receive your card from the service provider, and use your credit card strategically to maximize these benefits, be it during the holiday season. Whether purchasing during, or end-of-year offers; Many e-commerce sites and retailers offer attractive offers on credit card purchases.
Remember that the benefits on your card can be great for saving money, but be careful not to spend randomly with the aim of accumulating rewards points and taking advantage of the benefits, as this can lead to overspending and You may drown in debt.
6- Keep your card information safe
Finally, when using your credit card online or even in a brick-and-mortar mall, keep your card details and personal information secure to prevent unauthorized use and potential fraud.
You should keep your card safe, use it only on trusted and reputable websites or institutions, be careful when sharing your credit card or personal details, check your card details regularly to avoid unauthorized transactions. and, if such transactions occur, notify the issuer. Card information is provided immediately.