Your credit card can be one of your best financial tools when used correctly, but it can also be one of your worst financial liabilities if you don’t use it wisely. If you want to get the most out of your credit card without paying interest or incurring hefty fees, pay close attention to these ten credit card tips for smart users!
Charge what you can afford
If you’re buying with credit, make sure you can afford to pay off your balance in full each month. Credit Card Tips Using more than 30% of your available credit increases your risk of identity theft and fraud, which not only hurts your credit score but also makes you liable for fraudulent charges on your account. Although it’s hard to resist temptation when everything is only 5 bucks! shopping online or over-spending on items like takeout food or coffee, doing so will cost you way more in interest fees than it’ll save you at first blush. Think twice before swiping and remember that if something is too good to be true—like a $50 Gucci watch for $5—it probably is.
Know your limits
It’s tempting to sign up for a lot of rewards credit cards in hopes of racking up a lot of points, but don’t go overboard. It can be easy to get carried away with spending just for points and forget about what you’re spending your money on—so don’t fall into that trap. Know your limits and stay under them as much as possible. Every dollar you spend is a dollar out of your pocket—you should never forget that. Always keep track of what you are spending so that you can take advantage of sales and other promotions without overspending or going into debt.
Don’t max out card
While there’s no hard-and-fast rule that says you can’t have more than one card, using multiple cards for everyday purchases can be a great way to accrue lots of debt quickly. Even if you manage to keep up with payments, you could wind up paying hundreds or even thousands of dollars in interest fees when all is said and done. Don’t take on unnecessary credit card debt – set a personal limit on how much you plan to spend on each card and then stick to it. Ideally, try not to carry more than 30% of your available credit at any given time. If things are tight and finances are low, consider getting rid of at least one unused card.
Plan Your Spending
If you don’t know how much money you have to spend, then spending becomes a risky game of trial and error. Make your finances predictable by writing out a monthly budget. If you’re not sure how much money to spend on rent or food, use a simple formula that takes into account your current expenses and desired lifestyle to give yourself an idea of what’s reasonable for your income level. That way, there are no unpleasant surprises when it comes time to cut back on frivolous purchases like takeout and concerts.
Watch spending in December
The holiday shopping season has begun, and it’s common for shoppers to suddenly find themselves with limited funds. It might be tempting to use a credit card, but it’s important to remember that buying things you can’t afford is not only costly; paying your bills on time is also vital in maintaining a positive credit score. Make sure you have enough cash on hand to purchase gifts and make sure you pay your credit card bill in full every month. If you need help sticking to a budget during December, apps like Mint or You Need A Budget will help make keeping track of expenses easier.
Stay on top of statements
If you’re not being vigilant about your credit card statements, it’s easy to miss an unexpectedly high balance. When that happens, you may be hit with interest or over-the-limit fees and find yourself in a hole from which it will take time to dig out. If you have several cards or rarely pay attention to statements, automated reminders can help. Financial management sites like Mint and money management apps like Digit can automatically notify you of upcoming due dates and even monitor spending patterns (to prevent erroneous charges). If you use those tools, set up email reminders now—you’ll thank yourself later.
Use a Cash Back Rewards Credit Card
Some credit cards pay you a certain percentage of your total purchases back in cash. If you use your card for all of your spending, you can earn some money while buying what you need. Some rewards programs even include airfare and hotel points! Just be careful: make sure to pay off your balance in full every month so that you don’t end up paying interest on top of cash back rewards.
Double down on payment due dates
If you want to avoid late fees, try scheduling your credit card bill to auto-pay just a day or two before your due date. The closer it is to when you are paid, the less likely you’ll forget about it and let it slip. If possible, schedule any additional recurring payments from your bank account on that same day as well. That way, if your paycheck goes in early (like most of them should) then you’ll be completely cleared for another month’s worth of transactions.
Keep track of rewards points, but don’t obsess over them
If you’re using a rewards credit card to get more cash back, keep an eye on your point balance it is Credit Card Tips. If you don’t want to hassle with tracking, it may be better to look for cards that offer flat-rate cash back bonuses instead of points. Points are a bigger deal with travel credit cards, which can cost hundreds of dollars in annual fees. But most cash-back rewards won’t be worth spending hundreds on an annual fee; if you have a card that does carry such costs, always know what kinds of purchases will trigger those perks—for example, getting 2% back on gas or groceries means you may not want to use it at Amazon or iTunes.
Learn About Balance Transfer Offers
Balance transfer offers are pretty common nowadays. That’s because they’re a great way for card companies to get more customers. They do it by offering cards with 0% introductory interest rates on balance transfers and purchases. And while these are great deals, it can be hard to take advantage of them without falling into a trap. To avoid falling into one of these traps, here are some things you should know about balance transfer offers in Credit Card Tips.