Credit cards offer some big advantages compared with other types of payment. However, to use a credit card effectively it's important to understand how credit card payments work, and how and why credit card charges are applied
Credit card payments explained
Credit card payments are managed with a monthly statement which details all your transactions during the preceding period. It's essential that you pay attention to the deadline for credit card payments printed on the statement, as to avoid interest charges you'll need to pay the balance in full on or before the deadline. If you can't meet the full amount, you'll have the option to make at least the minimum payment, which will be less than the total balance. However, credit card charges will come into play here in the form of interest. If you choose to make at least the minimum payment it will take you longer to repay the outstanding balance and it will cost you more. You should also be aware that credit card late payments can also incur late payment fees. Details of this will also be included in your statement. You can of course also pay off any amount of your balance whenever you choose.
Managing your credit card payments effectively
Budgeting and managing your money carefully are among the most effective ways to avoid credit card charges. You may find it useful to draw up a monthly budget planner and factor in your credit card spending. Start by adding up all of your planned monthly spending, including household bills, food and clothes shopping, and any additional luxuries. Compare this with your total income, accounting for income tax, to determine how tight your budget is. Knowing how much you can spend on your credit card each month will help you stay organised when it comes to making credit card payments after receiving your statement. Staying organised and disciplined with your money is a huge step towards avoiding credit card charges, and enjoying a brighter financial future.