Tips on how to use your credit card wisely

I have been using a credit card for years, and never have to pay one cent in interest to the bank issuing the credit card.

The bank has been rewarding me with cash for using credit card because I redeem the cash reward using my credit card reward points.

The following are tips on how to use your credit card wisely:

1. Save first

This is not a new rule.  It does not matter if you are paying in cash or credit card, the same rule applies.

You must save first to buy the things you want.

2. Separate account to pay credit card

You have to open a separate account just to pay credit card.  You can link the account to the credit card account, so that payment is automatically deducted on the due day.

If you want to go for a vacation in a seaside resort, you can save up for months into this account.  When you have the money, then you book the resort.

3. Lower your credit limit

Every credit card comes with a limit.

When the bank gives you $5000 credit limit, that does not mean you have to max out the credit limit.

You can ask for a lower limit of $1000 or $2000 or even less.

If you want to go overseas for vacation, and you have saved up $5000, you can ask the bank to increase the limit.

4. Business expenses

If your boss wants you to buy something, you can use your credit card to pay for it.

Since you can claim the amount from the company, there is little risk that you will default on the payment of credit card bill.

This is the way to get more credit card reward points that you can redeem for cash.

All the above are basic tips on how to use credit card wisely.  Always think of how to get the best out of the bank, and not let the bank gets the best out of you.