Credit cards can be a powerful financial tool when used the right away, giving you access to funds in an emergency and helping you build your credit score. But, it’s also extremely easy to swipe your credit card for impulse purchases and go down a debt spiral. Let’s take a look at how you can use your credit cards in a way that will benefit you.
Pay Your Bills Every Month
With credit cards, it is important to not just make the minimum payment. You should try to pay your bills in full at the end of every month. Any balance you carry over to the next month will be charged interest that can go as high as 23%. So, to avoid this, ensure you either automate your payments or keep a reminder to help you pay your bills on time.
Don’t Default on Your Payments
If you cannot pay the entire bill, you should pay at least the minimum required amount so you don’t default on your bill. Keep in mind that any payment defaults will be reported to credit bureaus, which will, in turn, lower your credit score.
Keep Track of Your Expenses
Remember to log into your account every week and go through the expenses charged to your card. This will help you spot fraudulent charges, if any, and will also help you keep track of your spending. If you notice a pattern in your expenses, you may want to reevaluate your spending habits.
Choose Cards That Give You Perks
People who use credit cards to their advantage often make use of perks and rewards that their cards offer. If you tend to charge a majority of your expenses to your credit card, consider getting a rewards credit card that will offer you cashback, loyalty points, or frequent flyer miles, for using your card. You can also make use of the other perks and benefits offered by credit cards like complimentary travel insurance, extended warranties, and price protection.
Use Your Card for Big-Ticket Purchases
If you are trying to limit your credit card usage, consider only swiping your card for big-ticket purchases, and not small charges that can add up over time.