A credit card is also known as “plastic money”. A credit card allows a person to borrow funds from a bank, a financial company or lender. This new financial tool has the potential to change your life. But credit card use will bring positive change or make your life worse. It depends on the way to use a credit card. If you use a credit card wisely, it will give you financial liberation.
Otherwise, it can let you fall into debt.
Millions of credit card users exorbitantly overcharged because they do not use it in the right way. Hence, it is best to use a credit card responsibly. Take credit card as a financial tool that helps you to build a healthy credit history that will serve you later in life.
The good credit score can make it easier to buy a new car or a new house on low-interest rates and fees. Here are top tips and tricks to help you to avail the benefits of having credit cards and avoid any costly mistakes.
Credit Card Tips and Tricks
That is why we have come up with tips and tricks regarding credit card usage to help you boost your credit rating. Here is the list of credit card tips and tricks for beginners. Follow these tips to avoid accumulation of interest and getting a bad credit rating:
1. Be Aware with Terms
Make sure that you know all the terms either you have it or going to apply for a new one. You should have prior knowledge about the interest rate, when your payment is due, the fees and all those factors which may incur an increased rate of interest.
It is important to understand the Annual Percentage Rate (APR), which decides how much interest you pay.
2. Keep an Eye on Balance Alerts
Mobile banking services have made it easier to have a check on spending with your credit card. Many large card issuers will notify you via email or mobile text alerts whenever you have spent the amount equal to the threshold that you have set. Mobile alerts will notify you when:
- When you have utilized 30% of your credit. For
example,if your credit card limit is £1000. Then you should spend under £300.
- If spending is unusual means doesn’t fit your usual pattern of spending, or transaction is from an
3. Activate Spending Analysis Tools
Spending Analysis Tool is one of the most important features offered by most card issuers. Spending track app
This will help you to analyze spending where you have spent more and where you have good control
5 Ways to Track Credit Card Spending
- Sign up for transaction alert.
- Use text message banking to get on-demand accounts updates, such as a balance total.
- Despite waiting for credit card bills, log in to your online credit card account and have a track of your account.
- Your credit card statement breaks down your spending by categories. This might alarm you to cut unnecessary expenditures and save money for essentials.
- According to new federal credit card regulations, you have to provide a snapshot of your credit debt.
- This will help you to calculate how much you need to pay each month to pay off your current debt in three years.
4. Pay Your Bills on Time
It is important to pay bills on time to avoid interest. If you don’t, it will damage your credit score. Although it is very important to never skip a payment, still there are chances that you cannot afford to pay the full amount.
In this case, pay a minimum amount of your credit bill. Because if you miss a payment, it could result in a penalty, higher interest rates and a negative impact on score.
Your credit cards become expensive if you do not pay your bill in full and on due or before the due date. Consequently, the interest rate may increase to 20%, converting little debt into big debt.
Moreover, if you develop a habit to charge your card anytime in between the due date, this will make your credit card utilization low. Consequently, it will help to have a good credit score.
5. Is One Credit Card Enough?
Every new credit card advertisement may make you tempted to avail that too. But keep in mind, that every new application for a new card will drop your credit score. At the same time, it will increase the risk of too much debt on you.
So, it is better to keep one credit card especially when you are a college student.
6. Switch Your Due Date to Avoid Missing a Payment
If you are facing problem in payment of credit card bills as if the due date comes at an inconvenient time during the month. Despite missing payment, it is better to call your card issuer to move your due date.
This one simple move will help you to preserve a good credit profile.
7. Get a Reward or Cash-back Card Now
Credit card companies offer attractive deals to win the loyalty of their customers. So choose the best credit card for rewards. It is good for you to take advantage of these offers by using a credit card wisely.
If you are punctual in your full payments, a cash-back credit card is a great way to get some percentage of the amount you spent in form of cash or a reduction in your bill.
Another key point is keep one high-reward card for most or all of your purchases. This is a good way to rack up a lot of points.