At Flash Financial Guide, you can find many credit card tips to use them correctly. Making consistent, on-time payments can improve your credit score, and some cards provide rewards for purchases or even a 0% interest rate on balance transfers from other credit cards for a limited time.
However, if you overspend on credit, monthly payments and accumulated interest might become a problem. To avoid typical credit card issues, follow these tips:
Every month, pay off your balance
By paying off your credit card amount in full each billing cycle, you can avoid paying interest on your purchases.
Resist the urge to spend more than you can afford in any given month, and you’ll get the benefits of using a credit card without incurring interest charges.
Use the card for necessities rather than desires
A credit card should be used with caution.
Spending money on things you don’t need can lead to debt. Credit cards can be utilized in emergencies, such as when you have a phone bill that is due before your next payday. Use the credit card as a temporary loan to yourself, and then pay off the balance as soon as possible to reduce or prevent interest costs.
Never, ever skip a payment
Pay your bills on a monthly basis, even if the minimum payment is all you can afford.
Failure to make a payment on time may result in a late fee, penalty interest rates, and a bad impact on your credit score.
Make use of your credit card as a budgeting tool.
Try using a credit card as a budgeting tool if you’re convinced you can use it properly and pay off the balance every month.
By using your credit card for all of your transactions, you’ll be able to see precisely how much you’ve spent at the end of the month.
Of course, you should only do this if you are confident that you will be able to pay off the sum each month. To avoid excessive credit card spending, never charge more to your card than you have in your bank account.
Use of a rewards card
If you use a credit card for the majority or all of your purchases, it makes sense to use a card with rewards.
You will not only save interest, but you will also get benefits such as cash, airline miles, or shop points.
Maintain a credit limit of less than 30% of your entire credit limit
One approach to keep your credit score in good shape is to keep your credit utilization ratio around 30%.
This credit utilization ratio is the percentage of total available credit that you are utilizing.
For example, if your limit is $1,000, maintain your balance below $300. However, the ratio applies to the total of all your cards, so if one credit card has a $3,000 limit with a $3,000 balance and another has a $7,000 limit with no balance, you’re precisely at the 30 percent level ($3,000 of an available $10,000), which is where you want to be.
Avoid using your credit card to take money from an ATM
Yes, credit cards allow you to withdraw cash from ATMs. But should you go along with it?
Why? Because ATM withdrawals with a credit card incur high fees as soon as the transaction is completed (with no grace time), which you do not want to pay.
So, don’t use your credit card as a bank account, and avoid cash advances or withdrawals.
Read the promotional offers thoroughly
Credit card firms use promotional incentives to entice both existing and new consumers.
While these offers may appear to be advantageous, make certain that you thoroughly comprehend the terms so that you do not fall into the trap of purchasing anything that you do not require simply because it is on sale.
Use your credit card for big-ticket items only
It’s so easy to shop with a credit card that most people get into the habit of making small purchases on them.
These small purchases, if left unchecked, can add up over time to take a life of their own.
If you want to avoid the surprise of how small purchases can accumulate into thousands, consider using your credit card only for big purchases.