Your credit cards can be some of the most powerful tools in your financial tool belt. But if you don’t use those cards carefully, they can do a lot of damage. Knowing how to use those tools properly can be a great way to prevent damage that can take years to undo. Following these eight tips can give you an excellent foundation for using your credit responsibly.
How to Take Full Advantage of Your Credit Cards
1. Pay the Bill in Full
Don’t be tempted to skimp on the payment no matter how appealing the minimum payment looks. Using too much of your available credit can quickly lower your credit score.
2. Use it With a Budget
Now that you are paying your bill in full each month, it’s time to keep your spending within a manageable budget. Small totals can add up quickly and even make it difficult to pay the total bill. However, if used properly, they are a great way to track and control your spending in specific areas.
3. Check Your Accounts
Seeing how much you are spending and where you are spending it will make it much easier to stick to that planned budget. Use online tools to check your credit card’s accounts weekly.
4. Take Advantage of “Perks”
Most credit cards these days have some extra protection built into them. While all cards should be protecting you against fraudulent charges, others will offer you bonuses such as extended warranties on certain items. Knowing what those perks are is a big help when deciding which card to use and when to use it.
5. Use Your Rewards
Do any of your credit cards offer cashback rewards? Be sure you are taking full advantage of those. Like other perks, these can vary a lot from company to company or card to card. One card might give you 3% back at restaurants, while a different one gives you 2% back with hotel stays.
6. Save Them for Big Purchases
Saving your credit for big purchases can be a huge help when an emergency happens. Everyone is eventually going to face an unexpected problem sooner or later. This advice isn’t just for emergencies, however. Rather than paying cash, use a credit card with a great cashback rate. The reward can shave some of the cost off the purchase.
7. Stay Under Your Limit
Not only should you take extra care to stay well below your credit limit, but you should also be aware of what all of those limits are. If you’re not sure you can handle the temptation that can come with a high credit limit, you can always ask for a lower limit.
8. Don’t Pay the Bill Late
Late payments are another item that can potentially wreck your credit score. They can also cost you a lot. Many cards charge steep fees anytime your payment is late.
Overlooking something that affects your credit score can have lasting consequences that can make your financial life far harder than it needs to be. It’s never too late to develop better habits with all of your accounts.