Take a look at the statistics on credit card ownership and it’s easy to see that credit cards play a huge role in global finance. The average consumer has around four credit cards. Of those four only half of those credit card spenders were earning rewards. 37 percent of small business owners report a reliance on credit cards to meet their business’s fiscal capital needs, and that out of that group, 44 percent report that the terms associated with their cards got worse with in a year of use. Only 50 percent of small business owners pay off their balances every month, and over 75% carry more then $10,000 in debt. That is big business for banking institutions. But all is not lost. Even if you are one of the 37 percent who rely on credit cards to keep your business running, there are things you can do to cut debt, pay less in interest and balance your net worth at the same time.
Step One: Take advantage of financial software to help manage your credit debt.
The world’s best mathematical minds still need and use computing power to help ensure accurate tracking of their finances. Solid reporting and tracking of your debt will ensure that overcharging and unforeseen mistakes do not slip by. Penalties for overdrawing or missing payments can be extremely expensive and do real damage to your credit score. You credit score is very important, having a good score will qualify you for much better interest rates on financial borrowing in the future. Lower interest rates can make or break your financial future, saving you thousand of dollars a year. Financial software can also save you or your company large sums of money. Hiring a personal or business accountant can be very costly, on average of $3000 a month.
Step Two: Only take cards which earn as you use.
Many cards offer cash back on purchases and spending. As long as you can be diligent and keep to a responsible payback system, those rewards can actually make you money. The key is paying the debt off every month. If you pay the card off before the interest kicks in the rewards will actual start to add up, and who doesn’t want to make money by spending money. Most companies offer around two percent cash back and some offer as much a five percent. That can add up very fast especially for those using credit for their business needs and are charging large sums every month.
Step Three: Set reasonable limits and be sure you stick to them.
Most credit card companies will let you set your own limits on your credit cards. This can be a great advantage as long as you don’t get greedy. Know what you need and only take limits for that amount. This will help you stay within your bounds. When choosing a limit, be sure it is a number you can afford to payoff every month. Remember the goal is to make money not spend money. By paying-off the balance every month you will avoid any interest on your credit and if you’re reaping rewards continue to make money at the same time. The credit card companies will offer to raise your limit or even do so without your asking. Don’t allow this to occur. This is not a gift. Credit card companies know that half of every card holder will not pay off their debt every month. Don’t be in that half of the group.
Step Four: Transfer any debt you have not paid-off to 0% interest rate cards.
Many credit card companies offer introductory 0% interest rates. This means that any money you can not afford to pay off at the end of the month will not be accruing interest. This may be one of the easiest ways to balance your networth with these credit cards that don’t charge interest. This is not to be used as a balance trick where you continue to take out new cards and continue to transfer your remaining balances. Taking out large numbers of credit cards, even if those cards are not holding debt, can damage your credit score.
Step Five: Always look for the best deal.
There are a lot of credit card companies out there and they all have different offers. Be savvy and look for the best deal for you. Daily finance wrote they savvy consumers were able to save almost $8,000 dollars over four years just by switching to better credit card offers. Think of applying to credit cards like finding a mate, don’t just take the first offer and always be open to a better deal.
