“I Need to Learn How to Manage My Credit Card!” A Financial Guide
Have you found yourself saying “I need to learn how to manage my credit card,”? A credit card can be a wonderful tool for building credit, as well as a great emergency backup plan.
You may need one to rent a car or a hotel, and if you run short on money at the end of the month, it can be a huge help in tiding you over financially. But it should come as no surprise that credit cards can quickly become a major problem. That’s why you need to know how to manage a credit card wisely.
With minimum payment options, high-interest rates, and the temptation of having the reserve of extra money available, it can be very easy to find yourself in a lot of debt with credit cards. And once you have it, it can be very hard to get rid of.
Now that we have that settled let’s go after the key essentials on how to manage my credit card.
Pay Your Bill on Time
One of the biggest advantages of having a credit card is it is a great way to build credit. Having a high credit score can affect your ability to get a mortgage or car loan, as well as rent an apartment or even get a job. And a major factor in calculating your credit score is when you pay your bills.
You want to be careful to always pay your credit card bills on time. Late payments can mean extra fees, and they will drag your credit score down. Make sure you know when your bill is due, and if possible, pay it early or set up autopayment.
Watch This Video About How To Manage Your Credit Card
Pay Your Bill in Full
When you look at your credit card bill, you’ll see the total amount you owe on your credit card. And then you’ll see a much smaller number that is your minimum required payment. It can be very tempting to just pay that much smaller fee and enjoy the extra funds.
This is a terrible idea. Although paying the minimum may seem like a great way to save money now, in the long run, it will lead to a spiral of debt. Make sure as much as possible to pay your credit card off in full each month.
Check Your Credit Score Every Month
Remember that credit score we were talking about earlier? Well, you don’t want to apply for a loan and find out at that point that you have a low credit score. You want to keep a close eye on your credit score.
You should be able to access your FICO score through your online credit card account. Keep an eye on it, and pay attention to what helps raise your score. This will also help you develop healthy credit habits.
Don’t Spend for Rewards
Oftentimes, credit cards will come with attached rewards programs. You may get money back on certain purchases, or you might get miles you can use for travel. Spending more money on your credit card will mean more money back in your pocket, right?
Wrong. It can seem like a good idea to spend more money in order to get more rewards but don’t be fooled. The rewards you get in the short term will mean more debt and higher interest paid in the long term.
Don’t Max Out Your Card
Another mistake credit card users make is maxing out their credit cards. Your card will come with a credit limit – the amount of money you can spend on that card. But as much as possible, you never want to hit that limit.
Not only will maxing out your credit card make it that much harder to pay off the card in full at the end of the month, it can hurt your credit score. Lenders want to see that you don’t use the full amount of money allowed to you. Keep credit spending to a reasonable amount as much as you can.
Avoid Cash Advances
Most credit cards come with a feature known as a cash advance. Much like it sounds, a cash advance allows you to draw cash from your credit limit. It’s not really that different from just using the card itself, is it?
As a matter of fact, cash advances are one of the most expensive ways to borrow money. Not only are there bank fees associated with cash advances, the interest on these funds can be higher. As much as possible, avoid cash advances at all costs.
Check for Fraud
Keeping your card information secure is very important, as you doubtless know. But no matter how careful you are, you are likely to have your card information stolen at some point. While some banks will keep an eye on your account and alert you of fraud, you want to pay attention as well.
Go through your statement each month and make sure all charges are yours. Sometimes banks will miss a fraudulent charge, and you don’t want to wind up paying for someone else’s purchases. Call your bank about any suspicious activity immediately.
More Answers to the Question “How to Manage My Credit Card”
Keeping a good credit score and a healthy credit life can be a simple thing. It requires financial discipline, and it will often mean you can’t make that fun splurge purchase. But in the long run, the rewards you reap will far outweigh that new item.
If you find yourself saying, “I need more information about how to manage my credit card,” check out the rest of our site at Credit Squared. We offer information about the best and worst credit cards and details about rewards plans. Discover the world of credit with us today.
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