Credit cards are beneficial, but at the same time, they can be a burden as well. If you do not use your credit card wisely, you will end up deep in debt, and you may even harm your credit score. But when you use your credit card correctly, it can be a great source of credit, and it will also offer you a lot of other excellent benefits.
Whether you already have a credit card of your own or are still planning to sign up for a credit card, you can check online on tips regarding credit card usage or check Loan Advisor for details.
Before you opt for a credit card, you need to know everything about it first, including its reward features, how it assesses your lifestyle, and what kind of card you need to get that has fantastic rewards and benefits and is the most useful to you. For example, if your card offers discounts when you gas up, but you do not have a car, the reward does not benefit you.
If you love to shop, you can get a credit card that gives many rewards related to shopping. If you love to travel, get a credit card affiliated with airlines, and offer rewards associated with traveling like lounge access, air miles, and more.
It is also essential that you read the terms and conditions. You compare the card benefits like credit shield, lost card liability, purchase protection, extended warranties, holiday insurance benefits, insurance, rental car insurance, and more.
Earn while you use your card.
Many credit card companies offer reward points and cash back if the credit card is used to pay your bills at a restaurant, utility bills, movie tickets, and more. Some card issuers team up with retail stores so that they can offer cash backs.
You can also earn by using your card by keeping a list of the fantastic deals and using them. You can redeem the reward points, and you can get anything in the reward catalog from a gift voucher to a car.
If you use your credit card to purchase items at the start of the billing cycle, you can use the interest-free period. This means that you can use up to 55 days of credit with zero interest, which is 30 days float, and the grace period can be up to 25 days.
For example, if there is an emergency, you can use your card to pay the hospital bills without spending cash. You can pay the hospital bill using your card, and you can file for Mediclaim with your insurance company. As soon as your credit card bill is due, your insurer will reimburse you, so you end up paying nothing at all towards your account.
Pay your debt in full.
If you only pay your monthly minimum amount due instead of the overall outstanding balance, you will be charged with interest on your card, and that is around 24% to 40%. Added purchases do not get to have a grace period, and the interest is charged immediately from the date of purchase.
Using your card wisely means that you pay off the whole outstanding balance at the end of your credit card billing cycle. This can put your card in a good record, and you can even use it as often as you want without the fear of having a high-interest rate because you are debt-free.
If the outstanding balance is too high, and you can't pay it all at once, you can make several small payments before your billing cycle to pay it in full before the due date. You can also pay more than the card's minimum amount due because it can decrease the interest.
Pay right on time
There are late payment fees that will be charged to you if you don't pay on time. You must make payments on time so you won't be charged extra. Your credit score is tied to your payment history; not paying on time will reflect your record.
If you have many credit cards, the outstanding balance of all of your cards will increase your debt, including interest and late payment fees. This will all reflect on your credit score, and it will make it challenging to apply for a loan in the future.
If you have multiple cards, you need to consolidate all of them at a lower interest rate and slowly pay them all off. If your credit cards have different due dates, you could request the bank to change the dates so that all of your card payments will fall on the same due date every month.
Take note of your credit score.
Your worthiness when it comes to credits all depends on your credit score. This will determine if you can apply for a loan or another credit card in the future. However, missed payments and other defaults can decrease your score. You must check your credit score, do your best to maintain a good one, keep track of how much you spend, and pay your balance.
Your utilization ratio also affects your credit score. It is computed by dividing your credit balance with the total amount of credit available. The higher the rate is, the risky it is for you, and it is not suitable for your score over time.
Credit card frauds are increasing every year, so it is best to get secure cards like the ones with PINs and the ones with chips, instead of the ones with metallic strips. PIN cards and chip cards are safer to use, and they are less susceptible to scammers because each transaction requires a PIN. Some banks will automatically send chip cards to the credit card holder if you have not received one yet contact your issuer.
Claim the benefits
Card companies have numerous offers every year. If you have a credit card and your issuer offers fantastic rewards, bonus points, cash backs, and other perks, make sure that you claim them so you can make the most out of your credit card. You can talk to your bank about the offers and check the terms and conditions.