How Can You Use Your Credit Card Effectively?

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Thin, rectangular, a piece of plastic or metal ‒ that’s the ubiquitous credit card.
You swipe a credit card to pay for your purchases at the point-of-sale (POS) terminal or enter its details during online transactions, just like you use a debit card. However, while money is deducted from your bank account in the case of debit cards, it is deducted from a pre-approved limit on your credit card that the credit card company decides based on your credit score and history.
A credit card extends a short-term loan based on your credit score, possibly without interest. When you pay back the loan on time, you get another short-term loan, and you enhance your credit score – isn’t that awesome? Well, that awesomeness is what a credit card is all about.
When you purchase from a merchant using a credit card, you cannot use your own money; you borrow the credit card company’s money. The merchant, the credit card company and the card network (such as Visa or Mastercard) coordinate electronically and almost instantaneously to authorize and process your payment. Of course, you will have to repay the credit card company. However, the best part is that you can avoid paying interest, depending on the timing of your payment. Moreover, there is a limit to what you can borrow. This limit is decided by the credit card issuer, depending on your credit score, income, and account history. So, when you make a purchase, the amount is deducted from that credit limit. When you pay it back, you may get back your credit. In addition, your credit score can increase or decrease depending on how you use your credit card.
As Uncle Ben said to Spider-Man, “With great power comes great responsibility.” Credit cards are a lifesaver when utilized judiciously with financial wisdom. When not used effectively, one may fall into a debt trap.
So, are you wondering how to use a credit card effectively?
Steps to Use Credit Card Effectively
And yes, an expert tip: Don't try to be that person who uses a credit card to pay off another credit card.
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