Credit cards are often labeled as hazardous because they entice you to purchase things you can’t afford at the time. However, credit cards appropriately used can give you access to free money and improve your credit score.
Are you ready to understand how to use credit cards properly?
Pay on Time
It doesn’t matter how many credit cards you have or what type of credit cards you have. Paying on time is critical. According to the Forbes article How To Use A Credit Card: Best Practices Explained by Chauncey Crail, paying the bills on time is essential to remaining debt-free and obtaining good credit cards. Banks and lenders are reviewing your payment history because 35% of your credit score comprises your payment history.
When payments arrive late, you get slapped with high-interest rates and low credit scores. Often, it leads to massive debt you will need help getting out of. At the same time, banks and lenders will deem you a risky credit borrower. Other loans you apply for have higher interest rates and bad terms and conditions.
How to avoid late Payments
Don’t worry. Late payments don’t happen if you set up auto payments and activate reminders that it is time to pay, such as notifications. The credit card company calculates minimum costs, and you must pay them to remain in good standing. Good standing is known as being on good terms with someone. A minimum fee of 25 dollars won’t cover your monthly bills.
Many credit card companies give you a period of grace of at least 21 days when you struggle with your payments. However, unfortunately, there are credit card companies that don’t have grace periods.
Therefore, to avoid late payments, research the credit card company you are using and turn on auto payments or reminders such as notifications.
Use Multiple Cards
In the article How to Make the Most of Rewards Credit Cards by Anisha Sekar and Kimberly Palmer, you can see that having multiple credit cards is an advantage. By having various credit cards, you maximize your ability to earn rewards. You can use one card for daily expenses. For example, the Citi Double Cash Card offers the cardholder 2% cash back on all purchases. You get 1% back when you purchase, and the other 1% when you pay off your bill.
Another card you can use simultaneously is the Chase Freedom Flex, which earns you 5% cash back on up to 1500 dollars per quarter in bonuses from having the card in your rotation. You must activate this clause; all other purchases will give you a 1% cashback.
You should start with only one credit card to learn how to use it properly. Only start with what you can handle. Then, it becomes more likely to end up in debt and need help learning how credit cards function more safely.
Earn Rewards
In the Forbes article I referred to earlier, How To Use A Credit Card: Best Practices Explained by Chauncey Crail, he writes, “Besides earning a high credit score, credit cards can be lucrative because of a high reward potential. When picking your first, second, or even third credit card, consider which rewards match your spending habits the best.”
You earn rewards by purchasing goods and services. The tips arrive in three categories: cash back, transferable prizes, and fixed-value points or miles. Naturally, there are pros and cons to each reward category. Therefore, it is crucial to remember that no matter what credit card provider and what card you select, any rewards you earn will be minimal if you can’t pay the credit card bill. Cards that offer more lucrative bonuses also come with higher interest rates.
Get the Right Card
As explained in the article How to Make the Most of Rewards Credit Cards by Anisha Sekar and Kimberly Palmer, no card fits everyone. A sound card for you can be bad for someone else. It all depends on your requirements and spending habits. Travelers will naturally benefit more from travel cards that pay you in points. You can use these points for different rewards. These travel rewards will mostly be free hotel nights and flights. A card that has these benefits is the American Express Platinum.
Parents, on the other hand, will reap the most benefits from cashback cards like Blue Cash because this card earns higher cashback rewards at, for example, supermarkets in the US and US gas stations.
Conclusion
In conclusion, to use credit cards correctly, you need to pay your bills on time, use multiple credit cards, learn how the reward system works for each card, and get the right card.
It may seem like a complicated process, but it is not when you spend time and effort researching different cards and credit card providers. When you use this road map, you will have great success with your credit card usage.
