Credit cards can both be a blessing and a curse. When used responsibly, credit cards raise the user’s credit score. Similarly, any misuse of the card by the user will damage their creditworthiness. Having a credit card, ironically, raises one’s credit score even if one can get by without one. At the same time, issues with managing debt can be impacted by improper credit card use. The future of one’s finances depends on how they are used today.
Manage your credit card
Recognizing balance transfers
The issuers of cards will always look for ways to attract buyers. A well-liked technique is a zero-percent balance transfer credit cards. However, the 0% interest rate is only available during the promotional offer period, which is typically six months as this is a promotional offer. The balance amount after six months earns the same interest as the regular outstanding balance. If the interest rate on the new card is higher, any transferred balance that isn’t paid off during the interest-free period will acquire more interest. In addition, a person’s credit score will be impacted by any usage that exceeds 30% of their total credit limit. Transferring a balance to a card that has never had one and paying it off within six months is ideal. This can help you save a significant amount of money on fees and interest.
Utilize the interest-free dates
Cardholders can take advantage of their credit during the interest-free period. There is still time for them to receive their statement and make the full payment without incurring interest. From the date of the statement to the due date, this time frame typically lasts 51 days. The day it is generated is the date on which the statement is due. For example, if a statement is generated on January 1st, the due date will be February 20th. There is a misconception that all purchases qualify for 51 days of interest-free credit. This is not the case for purchases made in the middle of the statement period. Any use made on January 15th, for instance, will only receive 36 days of
interest-free credit. Check your statement for any important dates, and keep track of all payments.
Read the fine script
Banks and credit card issuers are attempting to reduce their high-risk exposure following the collapse of the 2008 financial system. As a result, higher fees are assessed for any usage that exceeds the credit limit and for payments that are made later than expected. Usually, a tiny script that is easy to miss is used to report changes to the fees or charges. By signing up for online statements, one can periodically manage their account online without incurring additional fees. Analyze them for any changes to the fees and rates. Call the card services and discuss the overcharge with them if there is one. Negotiating with them and referencing prior payment history and the length of the customer relationship can occasionally help to waive the charges.
Apply for useful credit
A person’s credit score is analysed each time they apply for a credit card. Keeping two or three cards is beneficial for the credit score because it takes our payment history into account, but having too many cards can be problematic. Future lenders might be worried about cardholders who have too many open accounts. So avoid applying for a credit card until and unless it is necessary.
Credit cards are a necessary and generally good product unless one commits the error of improper use. It is up to the cardholder to resist the temptation to spend money obtained through credit card leverage. Having a strict spending routine can aid in making the best use of your credit card.