Looking to make the most out of your credit card?
While your credit card could be just what you need to make everyday shopping and business transactions a lot easier, you do need to use it properly. Here are three tips to help you use your credit card properly and put your credit card worries too rest:
1. Don’t use too much of your credit
Here is the thing – if you depend too much on your credit card, your credit score will come down. Your debt ratio plays an important role, and for that, a lot depends on your credit limit.
If your credit limit is $2,000, you shouldn’t be looking at spending more than $1,000 on your credit limit at one time. Some experts even suggest not using more than 35% of your credit limit. If you spend the entire $2,000 credit limit or near it, banks would take a look at you and think about your over-dependence on credit – which isn’t a good sign.
2. Don’t default on the payments
Defaulting on your credit card payments doesn’t just mean substantially higher fees, your credit score takes a hit too. A low credit score means that you wouldn’t be able to do anything from getting a loan, a mortgage, to even another credit card should you need one.
Pay your credit card dues on time, always.
3. If you need money, go for short term loans
Defaulting on your credit card payments mean fines with a higher interest rate than most of the other loans you can take. If you do need money and know that you wouldn’t be able to pay back your credit card due on time, apply for a short time loan instead.
Using a credit card has several advantages – some of the better credit cards even offer you great rewards. You could accumulate and use anything from flight tickets to shopping. However, you do need to know how to be responsible while spending.