As a rule, unless you are wealthy, a travelling businessman, or woman, you will only need one credit card. For some people, having a credit card is 'complicated' because they spend beyond their means. If you are a first-time credit-card holder, then ensure you fully understand the pros and cons; interest rates and due dates are important. Usually, your card will accrue an annual fee, so at the start of your year or term, ensure you pay it. In Jamaica, that figure may range anywhere from $2,500 to $5,000 but with interest this can become a very hefty sum over a few months.
Below are some tips for managing your credit card:
A. Know your statement date and your due date. The date when your statement is generated is very important; as important as your due/payment date. Don't wait on the financial institution to send this to you. It is usually mailed and can be delayed. Call in and verify the amount and due dates. This is your responsibility. Not getting your statement on time is not an excuse to disregard payment.
B. Spend only what you know you can pay back. Knowing what you can afford to pay back is key. I like to think of the credit card as a salary advance; reason being, that is how I am going to pay it back, from my salary. So it is important to know what part of your salary goes to bills and living expenses and what part is disposable income so you can realistically establish how much you can afford to pay back.
C. Keep transaction receipts so you can know beforehand how much money you have spent. This figure you may need to reconcile should the financial institution have it differently.
D. Payments. Be a disciplined card user and make your payments every month. Preferably, have a zero balance at the end of every month; and pay on or before due dates. For emergency unplanned spending, sometimes paying it all off at once is not possible. To manage this, make more than the minimum repayments. If you only pay the minimum each month, you keep accruing interest which over time could be a huge sum.
Having credit is a positive thing but with it comes responsibility. The best advice on managing credit cards is to charge only as much as you can pay off in full every month, or every two to three months. Carrying a balance beyond two to three months should be a red flag for you to check your spending.