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Credit Cards, so that they do not become a heavy burden (you can end up paying as much as 30% on interest & penalties), have to be managed just like any regular bank loan.

It is important to keep a proper mindset. Do not think of your credit cards as additional cash in your wallet. Thinking of your credit cards as available cash, you tend to purchase items that you want –rather than those which you really need. Or, if the purchases were for items you really needed, if you didn’t have the available cash in your wallet, you would postpone the purchase until you could afford it or had the available cash.

The proper mindset is to think of your credit cards as tools for cash flow management. You know more or less when cash will be available. If you are employed, you expect cash to come in at the middle and / or at the end of the month. If you are in business, you know when collections are expected.

It often happens that a purchase has to be made before your expected cash has become available. If you know that your cash will come in before the bill from the credit card falls due, make the purchase with your credit card –but pay off the whole purchase when your cash comes in and save yourself the interest cost. In this way, you will in effect have availed of an interest-free loan.

In today’s credit crunch and rising prices for oil & almost all commodities, you do not want to add interest & penalties to your expenses. Moneypenny offers some survival strategies in Digital Money World.

images from Microsoft Clipart, reconstructed by Ren Garcia

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