Credit cards are a huge part of the global economy. Though they can be misused, they also provide users with an important set of financial tools. If you’re going to use your card, though, you need to be aware of the following rules so that you can avoid breaking them.
Keep a limit on the number of cards
One of the big mistakes that consumers make is getting too many credit cards. While the increased credit limit might be nice, doing so definitely invites the possibility of more credit mistakes.
Don’t use store cards
None of the cards in your wallet should be store cards. Not only do these cards tend to have high interest rates, but they are limited in where they can be used.
Keep to a 15-30 percent limit
Your credit limit shouldn’t be the ceiling for your spending. If you want a stronger credit score, you will want to keep your total balances at around the thirty percent mark. If you’re looking to get a major boost, though, you’ll want to make sure that you’ve used no more than fifteen percent of your credit limit.
Pay attention to interest
The most important thing to know about your card isn’t your credit limit – it’s your interest rate. A lower rate means less money spent over time, so make sure that you’re constantly angling to move to cards that will allow you to keep a lower interest rate.
Don’t get cash advances
Cash advances are never a good idea. Not only is this a type of borrowing that’s usually made under duress, but it’s one that carries a very heavy price. Choose virtually any other type of borrowing over a cash advance.
A great way to keep on top of your bills is to pay off your card biweekly. This splits one big payment into two smaller payments and makes it much easier to ensure that you won’t carry a balance from month to month.
Look at it as a loan
When you spend with your credit card, you’re essentially taking out a loan. Not only are you paying a price for using the card but you’re also paying back what you spent. Looking at credit payments as a loan rather than as ‘free money’ is a great way to spend intelligently.
Look at rewards
Rewards matter with credit cards. The best rewards are those that make sense for your life, so only choose one with free airline miles if you plan to fly or one that rewards grocery purchases if you actually cook at home.
Favor cash back
Cash back is perhaps the best rewards because it can be used by everyone. It’s a reward that can actually help you keep your balance down, so don’t it ignore the opportunity to use cash back rewards.
If you’ve overspent on your cards, don’t despair – just fix the mistake. You can’t go back to the past but don’t let that stop you from making the right choice for your future.