Owning a credit card comes with a number of perks as well as responsibilities. It’s important to understand the repayments that you will have to make at the end of each month.
Credit cards have two payment facilities: straight or budget.
The straight facility requires that you pay for your purchase in the next month. No interest is paid with this option.
The budget facility allows you to pay your purchases off over an extended period of time. You will be charged interest with this option.
How does the credit card budget facility work?
The credit card budget facility can be ideal for when you want to make large purchases. It’s important to keep in mind that it comes with high interest rates.
With this facility, the credit card holder usually has to pay a minimum amount upfront.
You can ask your bank or credit card issuer to adjust your credit card budget facility limit to suit your unique individual needs.
Daily expenses should never be funded using the budget option.
Tips for responsible credit card use:
Don’t spend what you can’t afford
Each time you swipe your credit card, you should make sure that you’ll be able to afford to make the repayments.
Live within your means
Don’t splurge on your credit card if you can’t afford to pay for basic amenities.
Don’t borrow unnecessarily
It’s ideal to use your credit card in cases of emergency.
Pay your full credit card balance at the end of the month
It’s important to pay your balance in full. Making just the minimum payment will result in a lower credit score and you’ll take longer to pay your debt off.
Know the difference between straight and budget
You should know which payment method will suit you best.
