Are you working for your credit cards or are your credit cards working for you?

A lot of people would answer in the affirmative to the first part of the question. They are working for their credit cards and by extension they have a secondary tax master they must work for. Most people do not realize until late that they are burning or have burnt their fingers by their use of credit cards and left a huge hole in their finance that they struggle to fill. While credit card companies might sell you offers that look like they are making life more comfortable and enjoyable for you, you must realize that they are not a charity organization. You have to pay for whatever you spend and more. An illustration would help drive home the point. Let say you have a credit card with a limit of $5000, and then you see an offer for a brand new laptop, top of the range thing for $2000. Because of your spending limit, the buying decision is easy, you can seemly afford it! A typical card would have a minimum charge rate of two percent of the outstanding balance per month and at an interest rate of eighteen percent and you choose to go with the minimum payment of about forty dollar. You may not realize it but only ten dollars of what you pay may be applied to the principal amount that the laptop actually cost. The rest goes on to paying for the interest on the card. Thus it would take you almost 20 yrs to pay off the laptop but by then you would have paid almost twice the amount in interest. So you see you would have lost money over the long term. So the first point here is "use your credit cards with utmost care".

Do not use your credit card to purchase things you cannot afford. A good thing to remember is that every time you use a credit card you are spending money you may not have earned at that time but which you are going to pay for. It is not free money. It is a wise idea not to spend money on household items. This would be en expensive venture over the long term.

One major way of saving money long term when you use your credit card, is to pay up the balance before the end of the month. That way you would have technically borrowed money for free. Where you are making a large scale purchase that cannot be paid of in one chunk always pay more than the minimum amount. Schedule to clear up the balance as fast as possible.

One other major way to save money using credit cards is to renegotiate your rates. Many credit cards company would agree to a renegotiation if you have been a loyal customer. You do not have to have defaulted in payment before you renegotiate your rates. This would save you a lot of money in the long term again.