A credit card can be an invaluable tool for your financial management — if you know how to use it properly. You can harness the power of credit by making smart decisions about how you use your cards. Here are three tips to help you to master credit card use like a pro.
One of the biggest benefits of credit cards is that you can use them to earn a multitude of rewards. Every card employs a different rewards system, making it important that you read through all of the fine print and pick a card that gives you the most relevant awards for your needs and preferences. Some of the most common rewards include cash-back bonuses, hotel loyalty points, and frequent flyer miles for air travel. Be sure to weigh any fees for the card against the value of the rewards to ensure that you are coming out ahead.
Watch Your Credit Utilization
It is vital that you are informed about how your credit card use is affecting your overall credit history. How much you use your line of credit makes up 30% of your score, and it’s important to keep your utilization under this number. This means that you should not be maxing out your cards, or you will be penalized. Instead, you need to demonstrate that you will not be racking up debt just because you have the credit available to use. Knowing all of this credit info will help you to make more responsible decisions about how you use your cards.
Pay Your Full Balance Each Month
You do not have to worry about piling up credit card debt if you are disciplined about paying your bill in full every month. This means that you can only charge what you can legitimately afford. If you are worried about the debt starting to build up, you can even pay your bill a few times a month to keep ahead of it. It is also especially important that you pay on time so that you do not get dinged with costly late fees. In addition to the fee, a late payment can drastically affect your overall credit score in a negative way.
It’s important to be careful with using your credit cards. Employing these three tips will help you to use credit to your advantage. This commitment will allow you to make credit work for you instead of against you, boosting your overall financial health.
For help planning your financial future, let Tenpath Financial Group help you!