Credit cards are both beneficial and harmful in our modern finance world. You can free yourself from the need for cash, use it to build a good credit score, and buy anything/anywhere easily. But you must know that credit cards can easily accumulate huge debts and harm your credit score.
Getting your first or a new credit card is easy, but to maintain that card you’ll need intelligence, deep insight, and planning. If you become careful, you may fulfill your big financial goals through good credit card behaviors.
Here are some:
1. Using online banking facility
Today most of the banks offer online banking facility. So, you must also register your credit card for online use. By doing so, you can check your account activity anytime and can also track your spending. This is a better option than having your monthly statements, as we often forget our expenses. Checking accounts online will help you to monitor your spending and keep your finances under budget. Moreover, banks also develop apps that let consumers check accounts and pay credit card bills by using smart phones from anywhere.
2. Setting notifications or reminders
Being a responsible credit card user, you must update yourself about spending and payment history. If possible for you, pay off your credit card bills on the day you receive it. If it’s not possible, try to set a reminder on your smartphone or PC calendar regarding your credit card payment dates. This way you can get SMS’s or other notifications and pay your credit card bill on time.
3. Making small activities
It is wise to use cash rather than credit cards. But you also need to keep in mind that by using credit cards, you are actually boosting your credit score. So, you must use your active credit cards at least once in a month. Using those high-end cards will boost your score and you’ll be benefited from the purchases you make.
4. Paying up in full
The best way to handle your credit card is paying in full or as much as possible for you. This helps you to pay off the total bill every month without incurring any penalty.
But, this particular credit card behavior is not suitable for everyone. Not everyone can empty their wallet and put all the money towards credit card bill, at least not in every month.
Through this behavior you can keep your credit debts minimum along with winning more good credit points. You may also be eligible for future lower interest rates from other lenders and credit card companies.
Remember, your credit card is designed to help you buy anytime, anywhere without paying a single dollar in cash.
5. Negotiating other charges
After considering its rate of interest, you must decide if you want to keep a credit card with you or just depend upon cash. Interest rates may vary according to different card providers and different cards, but usually they are negotiable.
As early as you can build an outstanding payment history (with full and on time payments), you can start negotiating with your credit card provider for reducing your annual fees and other charges.
6. Not closing old cards
Cutting up old or extra credit cards might look like a wise decision to prevent yourself from accumulating more debt. But, do you have any idea that this could damage your credit score in other ways?
Closing an older credit account will reduce your credit history and harm your credit score deeply. The length of your overall credit history makes up 15% of your credit rating. Closing an older card will simply shorten the history associated with your score and negatively affect it.
So, if you really want to close some credit accounts, it’s smarter to remove newer cards rather than older ones.
Read more:
What are you doing wrong when it comes to credit cards?
Credit card lost or stolen – What should you do in such a situation?
How to manage your credit cards in 2017