A credit card can be a powerful tool. It can also be a destructive force if you do not know how to use one properly. You want to get all you can from your credit card and avoid the most common mistakes. Seven tips will help you to get the most from your credit cards.
1. Do Not Take Out Cash with Your Credit Card
The first tip is to never take out cash with your credit card. This can be tempting especially when you are at an event where credit or debit cards are not accepted. The problem is that the cash back option on your credit card comes with an incredibly high interest rate. The rate on the money is far higher than the basic interest rate for purchases. Find other ways to withdrawal cash if you need it.
2. Keep Your Balance Low
Your credit score can suffer if you carry a high balance on your credit card every month. Charging up to the card limit can also create overwhelming debt that will be hard to get rid of. You really want to make certain that your credit card balance never exceeds between 30 percent and 40 percent of the limit. This will improve your credit and keep you out of debt.
3. Pay More than the Minimum
Always pay more than the minimum at the end of the month. If you pay just the minimum, then you are going to start accruing interest. This makes every purchase much more expensive. It could take years to pay off a balance if you pay only the minimum amount. The best policy is to pay down the entire balance every month.
4. Always Make Payments on Time
A way to harm your credit score fast is to make late payment or to skip payment altogether. Late or missed payments can result in excessive fees or even increased interest rates. Repeated late payments will make getting new credit cards very difficult. You want to make payments on time and in the correct amount every month without fail.
5. Compare Credit Card Rates Regularly
Never be content with the credit cards you have. You want to regularly compare your credit cards to what is being offered by other banks. There might be new credit card offers that have lower interest rates, fewer fees and better rewards. If your first credit card did not have a rewards program, then compare offers to find one that does. You can save a significant amount of money over time if you are always shopping for the best credit card offers.
6. Know How Your Rewards Programs Work
You want to carefully examine all the details of any rewards programs attached to your credit card. You should understand exactly how it works and what you need to do in order to get the rewards. You might have to spend a certain amount or shop at a specific set of stores. You might be required to redeem your rewards points before a given date to prevent losing them. You can get the most from your credit cards by taking full advantage of the rewards programs.
7. Check Your Statements Every Month
Do not ignore your statements each month. You want to open and look at every one as soon as possible. If you have online billing, then check your account activity every week. You want to review all transactions. Look for anything you do not recognise. Look for incorrect charges from stores or restaurants. Dispute anything suspicious with your credit card company immediately.
You need to be careful when using your credit cards. Pay attention to the small details and do not use the cards for things you cannot afford. Being smart with your cards can increase your credit score and your borrowing limits over time.