Learning the Kredittkort Basics and the Convenience of Credit Cards

Learning the Kredittkort Basics and the Convenience of Credit Cards

Once we become adults and slowly become more independent, we start to actually appreciate the value of money. Of course, this is mainly because of the correlation between money, effort and time. To earn money means to spend time and effort into something, be it a job, a project, or a particular skill set we developed throughout the years. 

Independency also means that we will be completely in charge of a wide range of necessities and amenities essential to our survival and comfort. Rent, bills, food, clothes, hobbies, internet… 

There are many things that require us to have money, and once we start building our own families, we will understand how necessary it can be for the future, thus, understanding how valuable money is can be described as one of the most important aspects of leading a comfortable and responsible adult life.

Of course, the more we become familiar with the financial world, and the more we advance in life, the more complicated things become. Goals and dreams, for example, tend to be pretty difficult to achieve if you are not capable of understanding some very important aspects of finances that, surprisingly enough, are very common in today’s society.

Practices like saving and investing are, for example, fairly straightforward, but involve a certain level of complexity and discipline on one side, and on the other side, it requires proper knowledge, training and experience. 

That being said, we will talk about one specific article that is very common all around the world, and that aspect is loans. There are many types of loans, most of them provided by financial organizations, private service providers, and individuals. However, in this article, we will focus mainly on one particular form of loaning: Credit cards.

Debit Cards vs Credit Cards

Financial organizations, such as banks, provide a large fan of services for their customers, not only providing the option of opening different types of bank accounts, each one aimed towards a specific objective, but also, providing different types of cards.

The most commonly used cards are both the debit card and the credit card. They are both pretty similar when it comes to their advantages, but credit cards are well known for providing a lot more advantages when it comes to financial possibilities.

To explain this, we have to first understand how debit cards work. A debit card, simply put, is a card that allows you to use the money in your bank account in order to pay for different services. 

Money needs to be available in the bank account for it to work as intended, however, and most of the time debit cards cannot be used outside of your country, or for online shopping.

Now, credit cards, on the other hand, use the money from the bank, and tend to have a credit limit which you can spend. Different types of credit cards provide multiple limits, and to decide which clients obtain which cards, banks pay attention to their credit history and the way they handle their money. If you check out kredittkortinfo.no, for example, you’ll get to see the differences between some credit cards that are available.

The Advantages of a Credit Card

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The credit limit provided by these cards tend to be a lot more than one’s usual monthly income, allowing for the purchase of different products and services that would otherwise be very difficult to obtain on regular terms. 

The reason why credit cards can be so useful is because the money you use through them can be paid in multiple dues decided by you, providing some freedom and relief when it comes to financial choices and expenses.

Of course, just like a lot of loans out there, the more time you decide to take to pay the money you used, the more interests you will have to pay in the process, but this allows you to slowly pay the debt without having to spend a lot of money upfront, making it possible to purchase expensive products and services without sacrificing a lot of your monthly income, and only a small portion of it over several months.

The thing about credit cards is that you need to have a certain level of discipline when using them, and assessing your financial situation as well as your monthly income and expenses is also a huge part of using them correctly. Taking advantage of limited discounts as well is a very important part of properly using credit cards, since it is one of the most useful things you can do with them.

Thus, if you are here to learn the basics of credit cards, learning to avoid some of the most common mistakes and misconceptions about them is necessary for a fruitful and enjoyable experience.

The Do’s and Don’ts

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The most important thing to do when it comes to owning and using a credit card, is always following a set amount of rules. If you don’t, you might end up reducing your credibility inside of the financial organization in charge of your loans, which will reduce the chances of you obtaining certain benefits and services that can prove to be useful later on.

For that reason, you should always focus on:

    1. Paying on time: Always have money ready to pay your bills on time. If you miss out a paying date, it will affect your financial credibility and score, and an increase of the bill might also be included.

      If possible, you should aim to pay the bill as soon as you can to avoid further interests, and debt!
  • Be wise and disciplined: There are many occasions in which people use their credit cards without thinking too much about it. This is, as you might have expected, a big mistake, since it increases the chances of getting in debt, and failing to pay bills, especially when money is a usual issue.

    The best way to handle credit cards is with wisdom and discipline. Wisdom involves knowing when to use the credit card. Discipline involves having enough self

Examples of wise applications include using the card during rough moments in which money is a problem and you need to deal with your monthly expenses.  When you need to pay for an emergency.  When a product or service you need or want is on discount. When a product with limited availability is being sold…

Being wise with credit cards involves many things, and it is up to you to decide what is actually worth the hassle based on these examples.

Now, discipline involves having enough self-control to avoid using the card when you know for sure you are not in a financial position to handle the weight that it involves. If you have recently used the card, if you are already paying for something, or recently you went through a harsh financial situation, you might want to think twice before using it.

 

  • Make sure to own an appropriate amount of cards: As mentioned earlier, discipline is a very important part of the adventure. Still, if you can reduce the level of temptation involved in the journey, the better. Reducing the amount of cards you own reduces the chances of you misusing them, thus, greatly reducing the level of debt you’ll have to go through.

    In the same note, only owning credit cards that are suitable for your current financial and professional circumstances, is also recommended. This can be easily assessed from the credit limit of the card you decide to go for. If the limit is too large, you might want to reject it until you are in a more comfortable situation to properly handle it.
  • Try to only use a % of your limit: Most professionals out there as well as people who are experienced with credit cards, recommend only using from 30% to 50% of the credit card’s limit in order to keep a good balance and score with the bank of your choice.

Another thing to add is that, before even considering owning a credit card, you should try to attain financial stability to a certain degree. If you are not financially stable and you are regularly struggling to cover your expenses, owning a credit card will only make things harder for you, especially if you use them for impulsive shopping or to purchase things that are not essential for your survival. For that reason, focusing on your professional life to improve your financial situation should be a priority, and until then, staying away from credit cards as well as loans would be the wisest thing to do.

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