When used in a responsible way, credit card can be a valuable financial tool. However, many people get into trouble by making a habit of using their cards for purchases when they don’t have the funds to cover them.
It’s easy to get carried away with the endless rewards that come with using a credit card. Whether you prefer to carry out purchases in a fast and convenient way or are all about accruing points, it’s important to consider how you use your card.
Tips for Using Credit Responsibly and Fully Utilizing Your Cards
1. Know the Terms and Agreement Contract
Before signing up, make sure to read the terms and conditions of the transaction. This way, you will be able to avoid getting into trouble with the bank and accruing unnecessary fees or interest.
2. Pay on Time Always
Making late or missed payments can greatly affect a person’s credit score. It can also lead to higher interest rates and late fees. If you are not able to remember when you are supposed to make the payments before they are due, set up automatic payments or a payment reminder to make sure you get your payments made before it becomes late and a fee gets added to your account.
3. Don’t Just Pay the Minimum Payment
Having the minimum payment on time helps keep your account in good standing. However, if you only pay the minimum, you’ll be carrying a balance. The interest charges on your account can make it hard to pay off in full. So, try paying off the bill in full each month.
4. Stay Well Below Your Credit Limit
It is best to only use your cards when you need to and only when you have money to pay them off quickly. Low balances are better for your credit utilization rate and can affect your credit rating. Your credit utilization ratio, which is the portion of your available credit that you use, can affect your score.
5. Check Monthly Statements for Discrepancies
Regularly checking your credit card statements can help keep you informed about your spending habits and prevent you from getting lured into making fraudulent transactions. If you discover unauthorized transactions using your card, report them immediately to the card issuer.
6. Immediately Report Stolen or Lost Card
If you think that your card has been stolen or it’s missing, contact your card issuer immediately. It will then deactivate the old card and prevent anyone from using it. Many card issuers will give you a zero liability amount if your card is ever lost or stolen.
7. Monitor Your Credit
Being aware of your credit can help keep track of where you stand and what’s happening to it. Many companies like SoFi offer credit monitoring. According to SoFi, “When you apply, SoFi conducts a soft credit pull that will not affect your credit score. An approved application will result in a hard credit pull, which may impact your credit score.”
Regardless of what your financial situation is; having a credit card can be beneficial. No matter what your credit score and income are, there is an option for you.