There is plenty of conflicting information on how to use credit cards wisely. Some experts advise that cutting up existing cards and making only the minimum payments on new ones is the surest way to good financial health, while others recommend healthy card usage is necessary for building an excellent credit history. Read further for the specific tips that you need.
Tips for Using Credit Cards
One of the biggest mistakes people make when paying off debt is paying no interest at all on their balances. While this sounds like a good idea, in theory, the reality is that you will be charged interest on absolutely everything that you pay off, even if you never miss a single payment. This can add up to a significant amount of extra money over time.
Another important factor used by lenders is your history with paying bills. If you are constantly late, or simply don’t pay anything off when it is due, lenders will be less likely to give you additional financing. This is why so many cards offer cashback rewards when you use them for just spending money, rather than shopping or using it for other purposes.
Finally, you should always closely monitor your score at least once a year. Lenders look at many factors, including your payment history, total balances, and the number of new applications you make. All of these factors affect your score. Because this information is available to all of the major credit reporting agencies, it is an important asset to check periodically.
By following these basic credit card tips, you can avoid high-interest rates on your loans and cards. A good rule of thumb is don’t buy things that you can’t pay for in cash. Also, make your payments on time, and keep your balance low. Doing so will help you avoid financial hardship later on.