Credit cards can be a double-edged sword. They make life so easy, yet you can get into some serious debt if you’re not careful. Today, we’re going to share with you some credit card best practices. These tips will help you avoid fees, increase your credit score, and maximize rewards on your spending.
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Avoid credit card late fees
The best way to avoid credit card charges is to eliminate late fees. Late fees typically range between $25 and $35. However, they are entirely avoidable if you follow this simple step.
Set up the automatic payment of the minimum amount due each month.
It’s easy to set up, and there are no fees. Simply log into your credit card account and link your bank account. Have the bank withdraw the minimum payment on your card automatically from your bank account before the due date. Ideally, you should pay off your credit card balance in full each month to avoid interest charges. However, that isn’t always possible for some people.
By signing up to have the minimum payment made automatically, you are guaranteed to avoid late fees. This enables you to focus on paying down your debt instead of paying off ridiculous fees.
Increase your credit score
Credit cards can have a major impact on your credit score, either positive or negative, depending on how you use them. We’ve already eliminated late payments by signing up to have the minimum payment made automatically each month. Credit history (a.k.a. making payments on time) is 35% of your credit score. Avoiding late payments keeps your credit score moving in the right direction.
You can increase your credit score by paying down your balances and keeping them below 30% of your credit limits. This ratio is called “credit utilization” (balances divided by credit limits) and makes up 30% of your credit score.
Requesting a credit limit increase also increases your credit score. Increasing your limit lowers your credit utilization without reducing your credit card balances. Just be careful that these increased limits don’t encourage you to spend more on your cards!
Maximize credit card rewards
If you don’t have a credit card that earns rewards, you should consider upgrading. You’re missing out on free travel, cash back, and many other perks because you’re using a card that isn’t rewarding you for your loyalty. Additionally, many credit cards include valuable perks beyond earning rewards on your purchases.
Credit card rewards are very lucrative and can save you hundreds (or even thousands) of dollars each year. I have several rewards credit cards, and it can be difficult to remember which card offers what rewards. My solution? Put a little sticker on the back to remind yourself which card to use for gas, groceries, travel, dining, etc.
Other companies want to reward you for using your credit cards as well. Register your credit cards for free with services like Drop, Dosh, and Rewards Network to earn extra rewards. You’ll earn free travel or cash back when shopping at participating retailers and restaurants. The best part is that you can often just register your credit cards once. Then, the benefits will roll in without any additional effort.
The Bald Thoughts on credit card best practices to boost your finances
These simple tricks can turn your ho-hum credit card into one that helps you reduce fees, improve your credit score, and maximize rewards. If your card isn’t working well, you can easily find a better one that matches your goals. Our affiliate page showcases our favorite credit cards that help us earn miles and points on every purchase. But there are literally hundreds, if not thousands, of credit card options available to match your lifestyle and spending habits. Is your credit card working for you?
