It is important to keep your credit card paid off on a regular basis. Keeping track of your expenses using the card should be done regularly by keeping receipts or online record. You can do this by following tips from various financial gurus and fellow credit card users. They are the ones that can give you the truth about credit card use through their very own experience.
Check out this great list and worry no more about additional interests, charges, and penalties on your next credit card bill.
1. How Often to Use Your Credit Card to Keep It Active
As a rule of thumb, you should aim to use your credit card at least every one to three months to keep your credit card open and active and to ensure your credit card issuer continues to send updates to the credit bureaus. If you have several credit cards, it can be tough keeping them active without running the risk of getting into debt.
Just because you need to use your credit card often to keep it active doesn’t mean you have to go on a spending spree. It’s important to keep your credit card spending within an amount that you can afford to pay to avoid a situation where you can’t afford to pay your bill. Charge something as simple as a soda to keep your credit card in use.
2. Make payments in full when possible, and otherwise pay at least the minimum
There are at least two reasons why you should never just pay the minimum on your cards, and one is because this is a terrible way to pay off debts! Paying just the minimum means even small debts could be stretched out over years, and this means exorbitant interest fees.
However, if the minimum is all you can manage, make sure you pay at least that every month; otherwise you’ll have late or missed payments on your report for seven years.
3. Losing rewards
If you read your Cardmember Agreement carefully, you’ll probably notice that in order to keep earning and redeeming rewards, your account must be in good standing. If it’s not, you could lose those points or miles you’ve been working so hard to build up.
4. Keep track of your spending
Keep track of the checks you’ve written, debit and credit card transactions, and ATM card usage. Review your monthly statements when they arrive, and report any possible discrepancies immediately.
5. Keep Your Credit Card Balances Low
The higher your credit card balance in relation to your credit limit, the worse your credit score will be. Your combined credit card balances should be within 30 percent of your combined credit limits to maintain a good credit score. That’s $300 on credit cards with combined limits of $1,000.
6. Check your credit card mail
You can only benefit from the provision of the new Credit Card Law, if you pay close attention to notices sent by your issuer. It’s important to understand that your issuer can still increase your current rate as long as you are given an advanced 45 days of notice.
7. Stay below your credit limit
It might seem like staying under your limit is all you need to do, but in reality, how far under your limit you stay can affect your credit score. There’s so ideal number exactly, but credit experts suggest using below 30% of your total available credit to maintain a good credit score.
Know your credit limit, and stay well within it.
8. Do not take cash from Credit cards
This is one common mistake that most of us do without thinking of the ripple effect it will have on our credit score. Taking cash out of credit cards is a costly affair as the banks charge far more in interest for withdrawing money from a credit card than they do for making purchases.
Apart from that, cash advances from credit cards can also signal the lenders of your desperate dealing with money which again in longer run can hamper your credit score.
9. Review Your Credit Report
It’s important to regularly review your credit report. If you’ve recently been turned down for a loan, your credit report will more than likely provide the answer.
You are entitled to one free credit report per year delivered by mail from each credit reporting agency. With your credit report in hand, you should carefully review it to see which factors may be leading to your low score.
Charge cards have no preset spending limit. They allow you to make purchases and pay back the entire amount each month upon the due date. Failure to do so will incur heavy fees. Also, charge cards will reflect maxed out utilization on your credit report and can lower your credit score. Using credit cards is better for your credit and the set credit limit allows you to control your spending.