Many people are wary of using credit cards as they fear debt. The bad reputation of credit cards is solely due to its mismanagement. If used wisely, credit cards can be a great means to earn generous rewards and improve your credit score. Follow these tips and make the most out of your credit cards.
Pay Off the Credit Balance Each Month
Paying off your credit cards bills on time is the golden rule of credit card usage. If you miss the stipulated deadline for payment, you will have to deal with hefty interests. For that reason, if you are earning a regular income, make sure to pay your credit card bills on time. Certain banks also offer automatic payment facility for timely payment credit card bills. By signing up for such services, you can make sure you avoid skipping deadlines.
Avoid Taking up Too Many Credit Cards
There is a misconception that one can enjoy more rewards with more credit cards. On the contrary, handling too many credit cards can be cumbersome and may also affect your credit scores. If you are new to using credit cards, it is advisable to keep only one credit card. With too many credit cards, people tend to spend more which increase the debt.
Pick a Card with Generous Rewards
The perks and rewards vary with each card. Hence take up a credit card that offers perks that feel relevant for you. Whether the perks are cash backs, airline miles or discount on grocery items, ensure that the rewards suit your needs.
Pay More than the Minimum Repayment Amount
Try to clear off your credit card bills as much as possible. Pay the minimum amount, only during a genuine emergency. Procrastinating your debt by paying the minimum balance will only lead to further debt and heavy interest rates. Even if you can’t pay off the entire balance, try to pay at least the double of the minimum repayment amount.
Negotiate Lower Rates for Loans
Once you have built a good credit score by paying your credit card bills on time, you can use your high credit scores to get to get loans at cheaper rates from banks. Moreover, credit card companies also lower the interest rates on credit cards to retain their loyal customers.
Read the Fine Print
Each credit card is subject to different terms and conditions which are set by the issuing bank. Although credit card companies are not allowed to charge any hidden fees, you must ensure that there are no hidden costs related to your credit card.
As you can see, credit card usage entails several perks and benefits. If used wisely, they can be a wonderful financial tool.