‘People used to live from pay cheque to pay cheque, now they live from credit card payment to credit card payment’ – Robert Kiyosaki

Credit cards are consumer money tools that should be used for convenience and not as a quick-fix for buying things you can’t really afford.

Here are 3 super tips on how to make credit cards work for you in the best way:

Pay off your credit card bill on time every time

It’s not wrong to use your credit card. But you might want to make it a point to pay off your bill before the deadline or what is usually referred to as the ‘posting date’. Credit card companies usually allow a period of 30 to 50 days before they levy interest. According to a report from the BBC, credit card interest rates are currently pegged at a whopping 18.8% – one of the highest ever in the UK. The reason behind the hike is the high amount of bad debt incurred by credit card companies.

Tip: Set aside money to pay off your credit card bill. Avoid procrastinating payment of your bill beyond the posting date.

Reward schemes

Use the intense competition among credit card companies to your advantage as a consumer. Compare different companies for their reward schemes and points. Whenever, you use a particular credit card to pay for a purchase, the company awards you points based on the goods bought and the amount that you spend.

If for example, you shop regularly at grocery markets, choose a credit card reward scheme that awards more points for grocery shopping. You can use the accumulated points in exchange for rewards/purchases/holidays etc. Some credit cards allow you to use your balance towards paying your balance; these are preferable options.

Tip: Do not overuse a credit card just because you have a reward scheme. Use your credit card only for what you need to buy.

Use your credit card only as a convenient substitute for cash

The original objective of credit cards was a simple one: To allow consumers to use a more convenient payment option instead of carrying a wallet full of cash/. Stick to the original utility purpose; avoid using your credit card to buy things that you would not normally be able to afford.

When you pay your credit card bill late or use your credit card to withdraw cash, you are being charged exorbitant rates which are conveniently hidden in complex account balance sheets.

Credit cards should be used judiciously as a substitute for cash. Pay your bills on time every time to ensure you make your credit cards work for you, instead of falling into a debt trap you can’t get out of.