Credit Card Tips

Pay off your full balance every month. If you can do this, you are a credit master. Paying off your full balance every month is the quickest and best way to stay ahead of credit card debt. Because credit cards usually offer a 30-day grace period (the time between when the purchase is made and when interest starts to accrue), paying off the total balance means you’re using credit now—but not having to pay interest on it! That’s the best case scenario and if you can afford to do that every month, you’ll save money and improve your credit score.

Stay within 30% of your limit. We get it. Paying off your full balance every month isn’t realistic for everyone. If you can’t afford to do that, there is a next-best-thing though, and that is staying within 30% of your credit limit. For example, if you have a $1,000 credit limit, keeping $700 of that credit limit unused from month to month keeps your credit utilization ratio (a fancy term for how much of your credit limit you’re not spending) at 30% which is right where you want it to be if you want your credit score to rise.

Use a rewards card. Credit cards companies are a business and credit cards are a product. Creditors tempt borrowers to apply for cards by offering attractive rewards like airline miles, gift cards, and other rewards for usage. Check with your lender or bank. They almost certainly offer rewards cards that won’t cost you more in interest but will offer you monthly perks you can enjoy just for using the card.

Don’t miss payments. Set reminders on your phone, use automatic alerts from your bank, tie a string around your finger—do whatever you have to in order to remember to pay your credit card bill on time. Missing payments has a destructive impact on your credit score and will end up costing you more in interest and headaches than you bargained for. Plain and simple: pay as much of your credit card bill as you can every month, on time.

Check your credit report. This one will lead us directly into our next chapter. Your credit card balance is only a part of your credit character. The next big piece is your credit report and there are plenty of reasons to check it.

We’ll dive into this in detail in our next chapter but, in essence, checking your credit report is a safe and thorough way to make sure your credit usage is being reported accurately. It can also help you identify signs of fraud or theft.10 Get in the habit of checking your credit report annually and you’ll have more control over your financial life.

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