A credit card can be very unhealthy for your bank balance if not managed in a sensible manner so as to not fall into debt. A consumers credit card needs to be continuously monitored to ensure that no over spending is taking place without being aware. If you do not take care of your credit card, it can very easily become unhealthy.
Credit cards are among the biggest debt traps in the South African market. Many consumers consider the limit on their credit cards as part of their portfolio, when in fact it should not ever be calculated into the net worth of a person. The unused limit on a credit card should always remain external to the portfolio of a consumer, as using it amounts to nothing more than debt that must be paid off.
Paying off debt on a credit card should be a priority for a consumer, as credit cards often carry the highest interest rates and a low credit ratio makes up a significant percentage of their credit score. A healthy credit card does not have more than 30% of the available limit spent, and should not be used as a revolving credit facility.
Relying on a credit card to pay bills starts a cycle that will lead to debt trouble and hinder a consumer from effectively paying off debts. Do not make purchases on a credit card that can be afforded immediately, in fact leave the credit card at home when going out.
Offers to increase the limit on a credit card should be turned down unless it can be paid off within a proper amount of time, in reality reducing the limit will remove temptation. A credit card facility is a tool for emergencies, and not a daily resource.
Consumers are often drowned by reckless credit card activity, since it is easy to spend money today and not worry until next month. However it becomes a habit that can eat up eating their entire income. Keep credit cards healthy and keep your credit score safe.