Credit cards are a great way to open a line of credit, be able to pay for things over time and increase your credit score. Credit cards can actually provide you with benefits like cash back and airline points.
This is a great way to get rewards for things you already are paying for. Getting a credit card that offers these benefits makes your spending habits make you money. This also helps build your credit for future use.
By following these tips you can build smart, financially savvy habits that help you create the life you want to live.
Pick the Right Card
Before you even apply for a card make sure you pick one that rewards you for the way you live your life already. If you don’t travel, picking a card with rewards on travel is not going to benefit you. You want to find a card that rewards you for the things you are already purchasing.
Looking at the perks is only part of what goes into picking the right card. Before you commit it is a good idea to look at the terms of the credit card. This means comparing fees and interest rates of multiple cards to make sure you are getting the best deals.
It is beneficial to compare all the kredittkort fordeler before making your choice. This will make sure you are weighing the rewards you get versus the amount you have to pay. The benefits you receive should outweigh how much you have to pay.
Keep in mind that some cards will have annual fees, but if the interest rates and perks are better, it might be worth it in the long run. Choosing the cheapest option is not always the best option for what you need.
Purchase the Perks
When you pick your card, use it to purchase the thing you will get the most benefit from. If your card offers cash back on gas, make sure you use it for gas instead of your debit card. It helps to use it strictly for these items so you don’t end up spending your whole credit limit. You can use your card like a debit card by transferring money from your bank to your credit card every time you use it to avoid interest charges.
Pay On Time
Don’t get caught missing a payment. If you don’t make your payment on time you will end up spending more on late fees. These late fees aren’t the only thing you will end up paying for with late payments. If you miss a payment, after 30 days your credit score will be affected, which could affect your rates later. The longer you let your balance stand in your account, the more interest you will accrue as well.
Pay Full Balance
Along with paying on time, paying the full amount saves you money in the long run. Each month you leave a balance in your account, the more interest you accrue. Take advantage of the benefits by using your card but make sure you pay the full balance every month. This way your benefits outweigh the costs. The longer a balance sits in your account the more money you will end up paying for everyday items.
Don’t Reach Your Credit Limit
If your credit limit is reached, you are considered a liability by other lenders, and your credit score will drop. Some of your credit scores is dependent on your credit utilization ratio. This is the amount of credit you have compared to how much you have used. If you have used a big portion or all of your line of credit, your score will drop. It is best to keep your utilization ratio below 30 percent.
Watch Your Statements
Check your card statements weekly to make sure that you aren’t being charged unnecessarily or by anyone besides you. Especially if you don’t use it often, if it gets stolen it might take a while to notice the fraudulent charges. Stay on top of your card safety by checking statements frequently. This will also help ensure your card company isn’t charging you more than it should.
Limit Hard Enquiries
If you need multiple lines of credit, limit your inquiries. Try not to apply for credit cards very often as these inquiries can decrease your credit score. To keep your credit score high, don’t apply for a credit card within 6 months of the last inquiry. It is also important to keep your credit cards limited to two at most. The more credit cards you have the harder it is to manage your debt and payments. If you want to have multiple credit cards, limit it to two.
Keeping up with your credit card is about creating healthy spending habits in your life. If you want to get the most out of your credit card it is important to be savvy with the way you use it. For more help in being credit card savvy, check out www.nerdwallet.com/article/credit-cards/credit-cards-101. This can help you understand your card better so you can understand how to use it.
Following these tips, it will keep you on track to increase your credit score and stay away from credit card debt. Once you make these habits a part of your life, using your credit card can be beneficial to your finances. Following these tips can help you use your card to its fullest potential.