We all know how using credit cards can become quite a problem for people, things like getting into debt, or all the fees that come from missing payments. Luckily, with a liitle forethought, and knowing the pitfalls to avoid, using a credit card can be one of the beneficial tools that people can have. Used carefully, credit cards can be the most secure and convenient methods of payment, and one that offers valuable rewards.
Here Are Six Of The Best Ways To Use A Credit Card:
1 – A Payment Method
As long as you pay your monthly balance in full and on time, you will avoid paying any interest charges, and when used in this way, the credit card becomes simple method of payment, that allows cardholders to enjoy several benefits at no cost to them at all. For example, cardholders generally receive what amounts to a free loan, when they make purchases that are paid off 25 to 55 days later. In addition, by spending in this way, they are also given the protections against fraud, guaranteed by the Fair Credit Billing Act.
2 – Earning Rewards
Using reward cards will let you earn valuable cash back, points or travel miles for simply making purchases that they would have made anyway. Cash back gives discounts on purchases, from 1% to 2% generally. This may not sound like a lot, but some cardholders can earn hundreds of dollars in cash-back rewards every year. Alternatively, you might prefer to earn points and miles toward flights, free hotel stays or some other travel rewards.
3 – Protection
One of greatest benefits of using a credit card is that you are protected if a merchant fails to deliver the goods or services you paid for, or what you received was substantially different from what was described. To get your money back, you simply have to contact your credit card issuer and request a chargeback. A temporary credit for the amount in dispute is immediately received, and it becomes permanent once the card issuer has researched and substantiated your claim.
For example, if you paid for a product that never arrived by mail, you would receive a full refund. Or, if you purchase a service for one year, and the service provider goes out of business after a few months, you would receive a pro-rated refund for the service you didn’t receive. This can save you thousands onver a year.
4 – Collision Damage Waiver
Every time you rent a car, the rental company will try to sell you an expensive insurance policy that you pay by the day. But almost every credit card comes with a standard no-cost collision damage waiver policy that covers you if you use your card to pay for the rental. To activate this coverage, cardholders just need to decline any offered insurance policy.
5 – Sign-Up Bonus
The credit card business is one of the most competitive industries in the world, and card issuers are willing to go to great lengths to attract new customers. So much so, that many cards will offer new applicants valuable points, miles, or cash back, just for signing up. Travel rewards commonly give you enough points or miles from a single sign-up bonus to pay for a hotel or flight that would have cost more than $1,000. Cardholders must be careful to meet the terms of any offer, which typically include a requirement to spend a minimum amount within a given time period.
6 – Improve Your Credit Score
A credit card can be very helpful in building a good credit history, and this will enable you to qualify for better rates on some bigger purchases like a car or a house, amongst other things
Start With An Action Plan:
1 – Online Registration
Okay, the first thing you need to do, if you haven’t already, is register at your card issuer’s website. This will enable you to check your account online, even if you’re still receiving paper statements. Then you should check their site a few times a week. Have you decided to go paperless? Well, watch your e-mail closely.
2 – Watch Your Balance!
If you max out your credit card, you’ll end up with a low credit score, virtually overnight – which means that you’ll have to pay higher interest when refinancing your home or taking out a car loan. Plus you will have to pay higher insurance premiums also. To boost your credit score, use no more than 30% of your available credit at any time on individual accounts and collectively, even if you can pay your balances in full every month.
3 – Pay On Time
This is really important to be on top of. And if you use paperless billing, you may not be aware of your due date as much as you would be, so make sure to make it a priority to find out and stick to paying before this date, not leaving it to the last possible moment. Be aware that if you carry a revolving balance, and pay early but no payment is recorded during that little window, you’ll be counted as late, and be charged the late fees for it. Unfortunately credit card companies are allowed to change statement closing and due dates, so to avoid this problem you must verify them each month before making your payment. And if you’re getting paper statements, you must still check the dates. If you pay by check, always use the preaddressed bar-coded return envelope to ensure that your payment is processed promptly.
4 – Request A Limit Increase
If the amount of credit you’re using is way too close to your current credit limit (either on an individual card or all of your accounts collectively), ask for a higher credit limit. You might be able to increase the gap and improve your score. But don’t get a limit increase unless you know that you’re disciplined enough to not see it as an excuse to spend more.
5 – Avoid Too Many Cards
although your first few credit card accounts will build and improve your credit score, there is a point when acquiring more will reduce your score. Two or three cards are all you really need. Say “no, thanks” when the cashier offers 10% off your purchase in exchange for filling out the store’s credit application. And don’t complete an application just to see if you can qualify. Store credit cards just aren’t necessary (and the interest rates are generally ridiculous).
6 – Keep Accounts Open
Closing accounts may seem like the obvious way to fix the problem of too many credit cards. But it’s not. Once the accounts are opened, the damage is done. Closing them could actually drag down your score (the loss of available credit narrows the gap between how much you owe and your available credit). If your total amount of credit available declines, as it would when you close accounts, your credit score will also go down. Make sure you keep tabs on all of your cards. Know where they are; who, if anyone, is a co-owner or authorized user; how and when the monthly statements arrive; and the specific terms and conditions of each.
7 – Lower Your Rates
Before you try to lower your credit card interest rate, know how long you’ve had the account, and have a general idea of your payment record and credit score. Call the customer service and request a rate reduction based on your longevity, payment history and credit score. If you aren’t successful, don’t argue; politely end the conversation. Call back later and speak with someone else. Keep trying until you get a reasonable rate.
Is a passionate adviser at Marketunlimited who loves recommending/giving advice on Credit Card related problems.
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