Credit Card

Tips for Using a Credit Card

Tips for Using a Credit Card

A credit card seems like a simple tool that can make purchases convenient and quick. If used responsibly, credit cards do have many benefits, such as an improved credit rating, cash rewards, and air miles. However, reckless use of can is a call for trouble. This credit card advice will help you avoid common credit card pitfalls.

Avoid Impulse Buys

Just because you can buy something with your credit card, doesn’t mean you have to, especially if you don’t have enough money in your bank account to pay for your purchase. Frivolous purchases using credit cards can lead to debt. It is advisable to limit their use for emergency situations, like paying a hospital bill.

Pay Off Your Balance Every Month

Interest on credit card purchases can be avoided entirely by paying the outstanding balance in full at the end of each monthly billing cycle.

Never Skip a Payment

Pay your credit card bill every month, even if that means making a minimum payment. Skipping payments would not only mean a paying a late payment fee, but it also means a higher interest rate and a bad credit score.

Use the Credit Card as a Budgeting Tool

If you have used your credit card responsibly and were able to pay off the balance every month, you can use it as a budgeting tool. Make all of your purchases using your credit card, and by the end of the month, you can see exactly how much you have spent during that period. This, however, makes sense if you are confident that you will be able to pay off the entire balance each month. To be on the safe side, never make purchases that exceed the amount in your bank account.

Use a Rewards Card

If you use a credit card for nearly all of your purchases, then look for a card that offers rewards on purchases. This way, you will not only avoid interest by paying off the full balance every month, but you will also qualify for rewards like retail points, cash rewards, and air miles.

Do Not Exceed 30% of Your Total Credit Limit

Apart from making timely monthly payments, you can keep your credit score positive by not charging your credit card more than 30% of the allowed credit limit. A credit limit is a maximum amount that can be borrowed on a credit card without penalty. For example, if you have a credit card with a limit of $2,000, you should keep your balance under $600.

About the author

Willie DeJarnette

Just wanted to provide some basic knowledge of credit cards, credit score, and other credit types financial resources. Always trying to provide an understanding how to use credit cards and basically staying away from financial ruins.

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