Whether you’re getting your first credit card or you’d like to improve your habits with your credit card spending, we have some expert tips to help you use your card. There are many ways to use a credit card, but not all of them are wise or recommended.

    Use Your Credit Wisely

    It can be tempting to use your credit card to make large purchases you may have been wanting, especially if they fall within your card limit. However, it’s vital to remember that you should never spend money that you don’t have. A credit card provides you with the option to borrow the funds up to your card limit and then pay them back either in installments over time or as a one-time payment. Because you are borrowing these funds, you shouldn’t spend more on your card than you can afford to pay back.

    The exception to this may be in case of an emergency. Having a credit card with available credit can enable you to have the cushion of emergency funds when you may not have other options. This can be a great option to help you out. If you don’t have any credit available, that can take away this safety net and leave you financially stranded.

    Pay on Time

    Did you know there are benefits to using a credit card? Utilizing a credit card can be a great way to build or improve your credit score! The lender who provides your credit card will report your payments each month to the credit bureaus. This means that regular, on-time payments each month will help to establish or improve your credit score.

    Making your credit card payment on time each month is a crucial part of using a credit card wisely. You may find that a late payment will results in late fees, which can add up if you receive them month after month. This can also make paying down your balance more difficult. Beyond the fees you may incur, your credit score will also be impacted. The lender will also report your late or missing payments each month to the credit bureaus and will lower your credit score.

    Pay Off Your Balance Each Month

    Credit cards allow you to carry your balance over month to month as long as you make a minimum payment. However, just because you can doesn’t mean that you should. Carrying your balance over can result in paying interest on the balance amount and make it much more difficult to pay down. Pay off your full balance at the end of the month or you statement period to help save money and avoid being trapped in minimum payments and interest.

    Additional Protections

    There are additional protections that you can enjoy just by utilizing your credit card for purchases. By using your credit card, rather than a debit card, you can limit the damage caused in the case of theft. Rather than draining your checking account, there is a set limit on how much money can be spent. It can also be a much easier process to dispute the charges and remove them from the card.

    Most credit cards also offer insurance for your rental car and may also include travel accident insurance as well. If you do have interest or need to utilize these benefits, make sure to read through your documentation so you know exactly what your insurance covers. This can be a great benefit to utilize, especially when you’re on vacation.

    Earn Rewards When Possible

    There are different kinds of credit cards available, including cards that offer rewards. These rewards can include earning points to cash in for prizes, cash back offers, or even airline miles or travel discounts. In order to earn these rewards, you’ll need to use your credit card.

    By using your credit card for everyday purchases and paying off your card regularly, you can rack up the rewards and enjoy! Large purchases, or even large payments like your mortgage, can also help you earn those rewards. Additionally, many lenders may provide special offers to help you earn even more rewards on your purchases and spending.

    Using your credit card like an expert can help you earn rewards, build up your credit, and provide you with extra benefits. Building better habits with your credit card usage and spending can make a big difference in your overall financial health.

    Link to: What Happens When You Pay Off Your Credit Card

    Wasatch Peaks

    Written by Wasatch Peaks