After all the misconceptions about credit card do’s and don’ts, it is still considered one of the most helpful financial tools, especially when used in a responsible way. Having one enables you to properly track your financial duties because everything is recorded. But more than that, it can help you in emergency cases especially when you need a big amount of money.
Little did we know that we can make use of the best credit card to survive expense outbreaks. Scenarios like car breakdowns or damaged furniture and appliances which will require you a big amount of money in a one-time, full blast. Responsible card use and credit management can help you in times like these.
Good Credit History
Maintaining a great credit standing pays off when you need it the most. Keep your balance low and pay on time, your debt is the most significant factor in your credit history. Don’t max out your credit limit because most of the time, only a percentage of the remaining balance will be only the amount you can borrow when you need money.
Paying your balance in full and on time will boost your credit rating. Paying only the minimum amount (or the amount usually in bold) will just give you more to pay later.
Your credit history will help you prove to financial institutions that you are a good re-payer. With your background, it is easier than usual that they will allow you to avail a loan when you most need it.
Cash Advance
A cash advance is a service provided by issuing banks. It allows cardholders to withdraw cash up to a certain limit from an ATM or over the counter. The limit is usually a percentage of the credit limit or your balance. When you take a cash advance, it will be taken against your bill as another credit card transaction. A PIN is requested beforehand before you make a cash advance. If you will take a cash advance over the counter, the bank will request a proof of identification from you, or any document certifying that you own the account and you are yourself. Though taking cash advances are discouraged by the banks because of high interest rates, you can still use it for extreme emergency situations.
Balance Transfer
If you own more than one card, you can avail of a balance transfer. This is when you transfer the balance of your credit card to another. This will incur a lower monthly interest rate to the card where you transferred your balance and will leave the other account with zero balance.
You can then use your other card for new purchases when you need it for emergency cases. This time, you can buy more since you’re left with a bigger balance after the balance transfer. However, be mindful of all transactions because it can also lead you to more debt and low credit score if you pay late or not at all.
Deferred Payments on Monthly Installments
Banks and partner establishments offer easy payment terms for big purchases and even with 0% installment. Most of the time, furniture and appliances are expensive. If your refrigerator breaks down and you need to have it replaced as soon as possible, you don’t have a choice but to buy a new one. In cases like this, purchasing with cash can eat up your savings or your budget for weeks or months. But if you’ll buy it using your credit card, you can pay for it on an installment basis for 3 to 12 months, depending on the issuing bank and the establishment’s partnership.
Strict Responsibility Required
Even with these tips, your financial state will always be dependent on you. Your income will be put to waste if you don’t use your card responsibly. Be careful because every swipe can create an impact on your financial condition.
