8 Effective Ways of Using Credit Cards

Credit cards have become an integral part of our lives. We rely them for enjoying small pleasures and for making big purchases.

But as helpful as credit cards can be, using them the wrong way can lead to a loss of credit score and even get you into debt. Credit card scams can also get you in some serious troubles. Therefore, it is important that you know how to make the most of your credit cards and stop yourself from getting into trouble.

Here are some of the best habits for effective credit card use.

1. Find the Right Card
Not all credit cards are alike and you should carefully consider your options before you sign up with a specific card. It’s a good idea to compare different credit card offers.

Furthermore, if you’ve found a card for yourself, make sure you understand the terms and conditions before you sign up. Credit card agencies are good at telling you all the positives of the specific card, so you need to be careful and read the fine print as well.

If you don’t understand the terms and conditions, ask the card supplier to explain them to you. If they can’t do this properly, then you are probably better off with someone else anyway!

2. Pay Your Bills on Time
From the first day you start using the card, the most important thing is to keep up to date with the bill payment dates. If you miss one date, it’s easy to start missing them even more frequently.

The key is to build a habit that guarantees you are always on time with the payments. Smartphone reminders might be a good option to keep in mind – especially, if you are the forgetful kind.

3. Don’t Build Up Debt
Although credit cards are great for ensuring you can pay off sudden expenses, you should be careful about how much debt you are building up. A good rule of thumb to keep in mind is that your monthly debt repayment bills shouldn’t amount to over 20% of your income.If you feel like your debt is building, it might be a good idea to limit your credit card use or contact Citizens Advice for advice.

4. Check Your Credit Records
It’s important to regularly glance your credit records to ensure your credit card doesn’t charge for extra payments. Mistakes can happen without you necessarily doing anything wrong and it’s easier to clear these as soon as they happen.You might want to consider using a smartphone app that allows you to track your credit card purchases throughout the month. This way once the bill arrives you won’t be shocked to find out its content and spotting mistakes is easier as well.

5. Manage Your Card Well
You should also make sure you keep good care of your credit card. Make sure you keep your PIN code safe and secure.It’s a good idea to write down the numbers for ‘killing off’ your card in case you lose it. You want to immediately report to the credit card agency your card is lost to ensure it won’t get used.

6. Be Careful with Reward Schemes
Reward schemes – like credit cards – come in many shapes and sizes. You can find some great credit card rewards schemes, but all that glitters isn’t always gold. Be wary of joining reward schemes and carefully think whether you’ll really benefit from them. For example, sometimes you need to make a certain amount of purchases each month before you get a cashback reward. If you won’t typically reach the amount of purchases, but you have to make extra purchases to reap the rewards, you might actually end up spending more money than you receive!

7. Be Strategic When Paying Off Credit Card Balance
Your credit card balance typically shows you the minimum amount you need to pay each month, but don’t assume this is the best option for you. In general, you want to get rid of credit card debt as soon as possible, so pay as much as you can each month. Nonetheless, you shouldn’t pay off more than you can handle. Carefully calculate how much you can pay each month without harming other payment commitments and your living standards.

Furthermore, if you have more than one credit card, compare the interest rates on each card. Always start repaying the debt with the highest interest.

8. Be a Smart Consumer
Overall, you can make use of your credit cards effectively, if you are a smart consumer. Don’t spend money on things you don’t need and if you are looking to buy something, always check discount sites before purchase. Whenever you use your credit cards, keep track off your spending and pay off your debt in full as soon as possible.