The Handbook of Credit Card Best Practices: 6 Ways to Clean Up Your (Financial) Act
Despite how widely-accepted and popular credit cards are, people often associate them with extreme debt. Habitual misuse gives credit card ownership a bad reputation due to the detrimental consequences accompanying irresponsible card ownership. Should you choose to apply for a credit card, you should adequately assess the risks involved to avoid missed payments and steep interest rates, which can rack up debt quickly.
When people hear “credit cards,” they often think of horror stories ending in hoards of dept and regret. However, through responsible, diligent card ownership, you can utilize credit lines to build FICA scores and maximize cash-back rewards. Maintaining a moderate-to-high credit score allows you to apply for cards that provide lower interest rates, offer better terms and conditions, and guarantee higher return rates.
Navigating the credit card search
Applying for credit cards can be a daunting process for first-timers attempting to sift through dozens of offers and rates. Each card features specific APRs and rewards that can make or break your experience using and maintaining a credit card. Begin your journey on the right foot by proactively checking your credit score, identifying specific wants and needs, and selecting a card that matches your criteria.
Are you a student looking for affordable, low-risk lines of credit? Consider the 1fbusa card for low-interest rates and credit-building opportunities, pursuing 1fbusa reviews for more information. Are you an avid adventurer looking to get the best bang-for-your-buck? Consider travel or cashback reward cards to maximize savings while exploring the world. Are you interested in purchasing a big-ticket item? Apply for low APR cards to avoid built-up interest as you pay off your investment.
Practice responsible credit card ownership
Once you’ve researched, applied, and collected your credit card, engage in safe, responsible practices to evade debt accumulation and sidestep substantial fees.
Pay balance on time and in full
The tendency to overlook payment deadlines—resulting in expensive fees and detrimental credit score dings—is common among first-time credit card owners. Dodge easily-avoidable expenses by ensuring your bill is paid on time and—if possible—in full each month. You can achieve perfect payment attendance by regularly checking your balance, setting up automatic transfer options, and understanding the fine print of your agreement.
Maintain low utilization rates
As you delve into credit card ownership, brush up on your basic math skills to calculate your utilization rate, and aim to stay within the 20 to 30 percent range. You can estimate utilization ratios by dividing the amount spent per month by your card limit and comparing it to ideal percentages to gauge responsible spending habits. As a rule of thumb, you should strive to keep your balance as low as possible throughout payment periods to avoid unmanageable installments and maximize end-of-month rewards.
Monitor spending and credit score closely
A key aspect of managing credit debt is detailed planning and diligent monitoring. Putting sizable purchases on a line of credit only boosts your score if you keep up with monthly payments and closely track spending habits. Often, credit unions will offer free or discounted credit check-ups to encourage responsible practices and timely repayment. If you’ve had difficulty budgeting in the past, consider downloading a budget tracker to keep important information organized and set you on the path for success.
Understand billing cycles
There is a common misconception that assumes all credit cards are created equal. However, each company determines specific regulations, rates, and payment cycles, which can be challenging to manage if you—like most adults with credit lines—are utilizing multiple cards and reaping a variety of rewards. Most credit unions and banks require end-of-month payment and closing dates, although terms vary from card to card. Closely read conditions and identify important deadlines to avoid unexpected fees.
When it comes to practicing responsible credit card ownership, attention to detail is critical. With numerous companies offering multiple plans with varying terms and conditions, make sure you know your specific needs and expectations to attain the best credit fit.
