Question

7. What recommendations would you make in regards to properly managing credit card usage and repayment? Your response should be at least 100 words.

Answer 1

While using a credit card an individual should consider the following things

Paying the Bill by due date: One should ensure that the payment of the credit card bill is made in full and before the due date. In this way one can avoid paying interest on the due amount or penalty.

Judicious use: In order to avoid the vicious circle of debt, people should use their credit cards to finance their needs which are urgent and should avoid using the card for financing conspicuous consumption.

Managing credit card usage ratio: One of the ways to avoid unnecessary debt is to ensure that the credit card usage ratio is kept within an acceptable limit. Credit card usage ratio is the percentage of total available credit that is being used. Ideally, the ratio should be less than 50%.

Avoid skipping bills: One should avoid skipping bills of credit card, as it reflects negatively on one’s credit rating or credit worthiness.