Credit cards are the first step towards proving financial stability and are one of the best ways of solving any kind of financial crunch which might appear out of nowhere. If you are facing a shortage of cash and you have credit cards in your hand, then you are saved from a lot of burdens as these credit cards come in handy when there is an immediate need for money.
Learn How Should You Use Your Credit Card Smartly
It is imperative to build up a credit history for maintaining a good credit history. Certain risks are arising out of the use of these special plastic money. Some of the tips on using credit card smartly are listed as under:
Using a credit card as less as possible
People generally max their credit cards to keep on shopping and purchasing everything that they need. The total credit limit you are using adds up to the credit score of customers. It is considered to be the second contributor in the case of credit score. This is why running on credit cards month by month and using all of your credit balance can hurt the credit score that you have maintained. Using credit cards frequently can put you into credit card debt which might take a very long time to pay off.
Automatic Payments system
Credit card bills need to be paid every month and one might need time to get used to paying credit card bills. Plan of paying all your credit bills ahead of the scheduled time for preventing any delays. Start paying more than the minimum amount and keep checking your bank account to see if you have enough balance to pay. Timely payment is important as it increases credit score. Aim of paying all your credit bills on time to keep availing it.
Keeping track of all kinds of purchases
Before using credit cards, calculate the amounts that you are willing to pay towards credit card bills. Keep monthly records of all purchases that you make all through different months. Download credit card apps on your mobile to make it easy on the go. The moment you cross your monthly spending, do not use the card till you pay off all your previous balances. This is a secured method of keeping you out of debt every time and building a better credit score.
Set a defined budget
Credit cards turn out to help make purchases and earn rewards but you should not use credit cards to buy something unworthy or too expensive. Make a realistic budget on credit cards that you will be able to pay every month and stick to that strictly. Make a budget list on how much to spend on groceries, how much on home necessities, and how much to save. Keep about 20% of your credit card limit on paying debts. This way, you will have a credit score that aligns with your income and priorities can be given to all necessary things.
Redemption of rewards
It all depends on what kind of credit card you have chosen for the first time. If you prefer choosing a rewards credit card, then before using it, you should understand all the rewards programs and how it works. Spend all your rewards in categories that allow maximum rewards such as restaurants and gas. Check your credit card statement to redeem rewards in hotels, travel, gift cards and so many more. Some redeem cards come with expiration date and you have to use them before these cards are expired. Before selecting a card, see the expiry date tagged along with it.
Avoiding fees
There is a fixed annual fee with credit cards that you have to pay whether you use the card or not. But, dodging of credit card fees can be done in certain simple steps. Ideally paying fees on time is a great way of avoiding any extra fees. Do not keep any cash advance for avoiding cash advance fees. Foreign transactions charge the most and avoiding any foreign purchases save you from a lot of fees.
Credit statement needs to be checked regularly
Your credit card issuer sends you a bill every month indicating all of the transactions of the previous cycle. Review your credit statements regularly to see that any unauthorized charges have not been added to the same. Most credit cards come with 0% liability and if you do not maintain your credit score, then liability will be added to your card. A billing statement is required in case of a monthly payment scheme.
Perks with credit cards
Credit cards come with so many different perks added apart from the redeem points. Some extra perks which people enjoy with credit cards include price protection, travel insurance, etc. and you can get a refund if there is a drop in the prices of any goods bought with credit cards. With credit cards come perks because of which people choose credit cards. Just log in to your account and know about all the perks.
Bills should be paid in full every month
There is a minimum amount that the credit card issuer asks for every month. But the best idea is to pay the entire bill amount in full and in this way, you are saving yourself from the burden of paying money. The minimum amount puts in interest every month until you make a full payment. The balance will keep on decreasing since you are paying your interest amount in full.
Mobile App download
Keeping your credit account on your mobile phone lets you check your bills whenever you get the time. Just log in if you want to check your credit limit, view balance, report any kind of stolen or lost credit card, etc. If you have a high gadget phone, you can do so much with your phone itself.
These are some of the tips for using credit cards. Credit cards are essential and always use them in the right manner to avail maximum benefits.