A credit card is a great way to build a credit score as well as helping someone manage their money. You should understand the advantages and pitfalls of having access to easy credit. The piece that follows includes credit card fundamentals aimed at helping consumers make smart decisions about their finances.
Be wary of late payment charges. Many of the credit companies out there now charge high fees for making late payments. Most of them will also increase your interest rate to the highest legal interest rate. Before you choose a credit card company, be sure that you are fully aware of their policy regarding late payments.
Before opening a store credit card, look into your past spending and make sure that it is high enough at that store to warrant a card. When stores submit an inquiry into your credit history for a card, this gets reported on your credit report whether or not you ultimately get the card. Excessive inquiries from those retailers on your report can drop your credit score.
Always read everything, even the small print. Make sure you know exactly what is being offered in that pre-approved credit card before you take advantage of it. Understand the interest rate you will receive, and how long it will be in effect. Inquire about grace periods for payments and if there are any additional fees involved.
If possible, pay your credit cards in full, every month. Use them for normal expenses, such as, gasoline and groceries and then, proceed to pay off the balance at the end of the month. This will build your credit and help you to gain rewards from your card, without accruing interest or sending you into debt.
Practice sound financial management by only charging purchases that you know you will be able to pay off. Credit cards can be a quick and dangerous way to rack up large amounts of debt that you may not be able to pay off. Don’t use them to live off of, if you are unable to come up with the funds to do so.
To preserve a high credit score, pay all bills before the due date. A late payment can do a number on your credit score, and can also require you to pay pricey fees. You can save time and money by establishing automatic payments through your bank or credit card company.
Make sure that you pore over your credit card statement each and every month, to make sure that every single charge on your bill has been authorized by you. Many people fail to do this and it is much harder to fight fraudulent charges after a lot of time has passed.
When you are making a purchase with your credit card you, make sure that you check the receipt amount. Refuse to sign it if it is incorrect. Many people sign things too quickly, and then they realize that the charges are incorrect. It causes a lot of hassle.
Take advantage of the freebies offered by your credit card company. Many companies have some sort of cash back or points system that is attached to the card you own. When you use these things, you can receive cash or merchandise, just for using your card. If your card does not offer an incentive like this, call your credit card company and ask if it can be added.
One important tip for all credit card users is to make a budget. Having a budget is a great way to figure out whether or not you can afford to buy something. If you can’t afford it, charging something to your credit card is just a recipe for disaster.
Consider unsolicited credit card offers very carefully before you accept them. If an offer that comes to you looks good, read all the fine print to make sure you understand the time limit for any introductory offers on interest rates. Also, be aware of fees that are required for transferring a balance to the account.
Sometimes, when people use their credit cards, they forget that the charges on these cards are just like taking out a loan. You will have to pay back the money that was fronted to you by the the financial institution that gave you the credit card. It is important not to run up credit card bills that are so large that it is impossible for you to pay them back.
If you cannot pay your entire credit card bill each month, you should definitely keep your available credit limit above 50% after each billing cycle. Having a good credit to debt ratio is an important part of your credit score. Make sure that your credit card is not constantly near its limit.
Use a credit card that offers rewards. Not every credit card company offers rewards, so you need to choose wisely. Reward points can be earned on every purchase, or for making purchases in certain categories. There are many different rewards including air miles, cash back or merchandise. Be wary though because some of these cards charge a fee.
Don’t get high-limit credit cards by lying about your income. Many credit card providers will not verify your annual income and will just give you a credit card with a high credit limit. This high credit limit could lead to you getting into huge amounts of debt.
If you are getting rid of an old credit card, cut up the credit card through the account number. This is especially important, if you are cutting up an expired card and your replacement card has the same account number. As an added security step, consider throwing away the pieces in different trash bags, so that thieves can’t piece the card back together as easily.
Tuck your credit card behind your debit card in your wallet in order to avoid unintentionally overusing your credit card. When you are rushed or distracted, you may use your credit card instead of your debit card and end up with an unintended charge.
Credit cards can be beneficial if used the right way. Understanding each credit card is important, because this helps make better choices. Understanding the fundamentals of credit cards is important for consumers who wish to make educated decisions.