30 Jun TIPS ON HOW TO MANAGE YOUR CREDIT CARD AND RCP(REVOLVING CREDIT PLAN)
Set a reasonable limit initially when your get the credit card or even if you have it already, get in contact with your credit card provider and reset the limit to a manageable amount. Managing Director of Financial Reach SA Gcina Ntsonga says: “Set a credit card limit that is 10% of your month net salary, this will ensure you can cover the full amount of the credit card timeously without a severe dent on your budget”. If you are offered an increase on the credit facility, don’t accept it without doing a proper assessment of your finances.
Never, at any point, reach the limit of your credit card. This will result in additional charges that will cause the outstanding balance of the credit card to go beyond the limit itself. At this stage you might be tempted to start using a different credit card or applying for another credit agreement. This is the time you need to start talking a financial advisor as more credit at this stage can put you in a situation that is even worse than your current financial situation. Remember you can’t borrow your way out of debt!!
Structure your credit card usage and repayment around your payday so that you can maximize the interest free period given to you by the financial institution. A lot of credit card do offer facilities whereby you get an interest free period usually 30 days. Beware aware of your terms and conditions so you can take advantage of the interest free period.
Bare in-mind that these interest free periods are designed to get you used to using credit,this makes you more susceptible to opening up more accounts, using more credit cards. This is when you need to be at your most vigilant. Rule of thumb you should you should not have more than 5 credit agreements. Research has shown that once you have go over have 5 more accounts credit providers indicate that this is at consumers are most at risk of defaulting on the account.