5 Tips for Managing Your Credit Card
A credit card can be a very good thing. It can help you manage your monthly bills, and it may even help you earn a few discounts or rewards. Yet if it is not properly managed, a credit card can create a negative scenario for you, often leading to costly late fees and a poor reflection on your credit report. Proper credit card management tips can streamline how you use your card so you can get the most out of it without risks. Consider these tips:
1. Make Payments on Time
Paying your credit card bill on time is important. Most lenders require you to make at least a minimum payment each month. To avoid missed deadlines, set up automatic payments with your lender. This ensures you do not have to worry about those late payments and fines. This also reflects directly on your credit score.
2. Stay Within Your Limit
It’s easy to go from store to restaurant or throughout your day charging on a card without thinking much about the balance. Yet, going over this limit is an expensive risk you do not want to take. Some lenders provide you with an alert. You can set it up to alert you when your balance reaches a certain level. This gives you time to log in and make a payment.
3. Talk About Increasing Your Limit
As you build up your credit and reputation with the lender, be sure to ask for a credit line increase. Some may provide this on a routine basis. However, this doesn’t mean you should spend up to that limit. FICO recommends keeping the balance of your credit cards under 30 percent of the available credit.
4. Avoid Recurring Payments
It is easy to set up recurring payments for subscriptions or other purchases you make. However, doing this can increase your credit debt significantly. It also makes it harder to know who is charging your card and how often. Whenever possible, skip this type of payment setup. Instead, make payments manually for purchases so you know what you are getting and what you are spending.
5. Use Credit
It’s important to actually use your credit. Just having an open account does not help boost your credit score. Instead, if you do not want to incur fees but you want to increase your credit score, use your credit card for just one type of purchase each month. This could be a utility bill or your gas purchases. Then pay it off within the grace period.
By taking these steps, you minimize the risk you will overspend or negatively impact your credit history. Using your credit card in a responsible manner can save you time and money in the long term.