7 Tips Every Credit Card User Should Know
Credit cards are convenient, powerful tools to help build your credit, make big purchases, and practice financial responsibility. With that said, credit cards can seem complicated. Between interest rates, balance transfers, late fees, and due dates, there’s a lot of information to keep up with.
1. Know the Interest Rate of the Card
Credit card companies make money by charging interest on the money that you have borrowed. There are many great card options out there that offer introductory rates, as low as 0% APR for a certain period of time, which is a great tool to help you get used to the process of paying your credit card balance on time. Just make sure to pay attention to how long the introductory period lasts and what your interest rate will be once the introductory period ends!
2. Understand the Meaning of Minimum Payment
A minimum payment is what it sounds like, the minimum amount you must pay each billing cycle. It’s essential to recognize that it does not mean you can only pay the minimum amount. It is better if you pay more than the minimum payment because it shows your responsibility in paying off an expense, translating into a good credit score. Paying more than your minimum payment will also help you pay down any debt or balances faster. Try to pay your balance in full every month to avoid racking up any debt that you have to pay interest on.
3. Know Your Spending Habits
If you don’t think a credit card is right for you to make everyday purchases, that’s okay! It’s imperative to be honest with yourself about your money habits. Consider opening a credit card to have as a resource for emergency use only. Those just beginning to build an emergency fund can benefit from having a credit card to fall back on. Remember, having it and using it occasionally requires self-discipline. If you’re worried about using it responsibly, but want to use it to start building up your credit, try using it only on purchases you would have made with a debit card or cash.
4. You Can Make Payments Not Just On Your Due Date
Many people fall into the trap of forgetting they have a credit card payment due and suffering the consequences, like late payment fees or dings to your credit score. Most card issuers will accept payments during that billing cycle before the due date. Making your credit card payment before the due date (when you get your paycheck or happen to have some extra cash) is a great way to guarantee you won’t miss the payment. If you can make multiple smaller payments throughout the cycle, that’s even better!
5. Your Due Date is Negotiable
If you like having one consistent date to pay your bills, try calling your card issuer, and request your due date to be changed. You can adjust the date to the beginning or end of the month or around the time you receive your paycheck. Whether or not you change it, don’t forget to make a note of when your due date is, in a phone calendar, in a planner, or wherever you make a note of reminders!
6. Request a Raise On Your Credit Limit to Increase your Credit Score
Your credit limit isn’t necessarily fixed. Often, issuers will consider raising your limit if your income changes or another circumstance allows for it, but sometimes giving a simple call and inquiring is enough to have them raise it. However, it’s crucial you don’t use all of your available credit just because your limit was raised. Having your credit limit raised is a powerful tool for boosting your credit because it decreases your credit utilization ratio, the ratio of the money you’ve borrowed to the amount you can still borrow.
7. Always Keep an Eye Out for Perks, Deals, and Offers
Many people apply for specific credit cards to take advantage of the fantastic opening offers, like 0% APR or rewards points. But the deals don’t have to stop there. Many card issuers will offer promotions throughout the year, even for long time cardholders, like more points when you spend in certain categories or an interest rate promo for holidays or events. Keep an eye out for promotional emails from your credit card issuer to look out for these great offers!
USC Credit Union has a variety of credit card options for all needs and lifestyles. Compare all of our card options and see which is right for you!
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