Credit cards are great to help establish a good payment history with credit bureaus. But you can get carried away and end up with a significant amount of debt by missing payments. This is a trap from which it is very hard to recover. Here are some ways to manage your credit cards well.
Interest Rates
This is what your credit card issuer charges you if you don’t clear your balance every month, and the rate can vary depending on the card. If you don’t have good credit and can only qualify for a high-interest rate, you can work toward improving your credit by making on-time payments and request for a new card with a better rate.
Fees
Credit cards often have annual fees, balance transfer fees, international transaction fees, cash advance fees, and more. Depending on your use, certain fees will matter more than others. Check the details.
Rewards
Credit cards often offer rewards like points, miles, or cashback. If your card has an annual fee, ensure that the reward justifies the fee and you don’t pay more than the card is worth.
Payments
Once you start using a card, it’s absolutely crucial that you make all payments on time. Late payments can, unfortunately, stay on your record for up to seven years. Making only the minimum payment will also hurt in the long run.
Credit Utilization Ratio
This is the percentage of the available credit limit that you use. This is an important factor that impacts your credit score. Aim to keep it under 30% by paying as much of your bill as possible each month.
Review Credit Card Statements
Monitor your credit card statement and your credit report so you can identify any errors and report any fraud. This will help boost your credit score.
Change Due Date
If your credit card’s due date is around the same time as when you have other bills to pay, you can request to change the date to a more convenient time.
Debt Snowball
This is a credit card debt repayment method where you pay the minimum on each of your balances and use any extra money to pay off debt from the smallest to the highest balance.