6 credit card hints for savvy shoppers
A credit card, when used correctly, may be a highly useful financial tool. Making consistent, on-time payments can improve your credit score, and some cards provide rewards for purchases or even a 0% interest rate on balance transfers from other credit cards for a limited time.
Monthly payments and compounded interest can become an issue if your credit spending spirals out of control. To avoid typical credit card issues, follow these guidelines:
1. Make a monthly payment on your debt.
Paying the full balance on your credit card purchases each billing cycle will save you money on interest.
1 If you resist the desire to spend more than you can afford each month, you’ll reap the benefits of not paying interest on your credit card.
2. Use the card to fulfil necessities rather than desires.
The use of a credit card should be done with caution. Debt can be incurred as a result of impulsive purchases. Credit cards can be utilised in an emergency, such as when you have a phone bill due before your next payday. Use your credit card as a short-term loan to yourself, and then pay it off as soon as possible to reduce or prevent interest rates.
3. Make sure you never miss a payment.
Even if the minimum payment is all you can afford, pay your account every month. A late fee, penalty interest rates, and a negative impact on your credit score may be incurred if you miss a payment.
4. Use your credit card to help you budget.
Try using a credit card as a budgeting tool if you’re convinced you can use it properly and pay off the balance every month. You can see exactly how much you’ve spent at the end of the month if you make all of your transactions using your credit card. Of course, you should only do this if you are confident that you will be able to pay the debt off each month. Never charge more to your credit card than you have in your bank account to keep your credit card spending in check.
5. Make use of a reward card.
It makes sense to use a card that offers rewards if you use a credit card for most or all of your expenditures. You’ll not only save money on interest, but you’ll also get rewards like cash, airline miles, or shop points.
6. Maintain a credit limit of less than 30% of your entire credit limit.
Maintaining a credit utilisation ratio of less than 30% is one approach to keep your credit score good. This credit usage ratio measures how much of your total available credit you’re using. If your limit is $1,000, for example, you should maintain your balance below $300. However, the ratio applies to the total of all your credit cards, so if one card has a $3,000 limit and a $3,000 balance, and another card has a $7,000 limit and no balance, you’re right at the 30% level ($3,000 of a $10,000 possible limit), which is where you want to be.
