While it is true that owning a credit card is one of the most daunting parts of personal finance management, it is certainly not impossible to become a good steward of the power it bestows.
If you take care to gather all the information you need about its purpose and possibilities, then from being an intimidating responsibility, your credit card can become a completely convenient solution to your financial accountabilities.
So, are you thinking of finally getting that credit card? Here are the best tips for ensuring that you will take control of it instead of things going the other way around.
1. Inquire about rewards and cash back programs
Consider how owning a credit card also costs you even if it provides you great convenience. Wouldn’t it be nice to have a card that does more for you than just being a reliable substitute for cash?
Your credit card can provide a greater advantage by being more than just a mode of payment for your various transactions.
For example, a top bank in the UAE offers a family credit card that earns the owner points from transactions. In addition to that, the card automatically scores the owner discounts on flights, hotels and local entertainment.
2. As much as possible, pay in full every month
A lot of credit card holders are guilty of only paying the minimum per month. This creates a dangerous situation because they are left with a balance that grows in interest every month. In the long run, it can become much more difficult to pay everything off.
So, make it your goal to pay in full as often as you can to prevent those rising interest rates.
3. Do not ever max out your credit card
This is a common mistake among first-time cardholders. Some may tend to think that because they have an established amount of charges allowed each month, they should strive to actually reach that amount in terms of bill payments and purchases.
The responsible way to use your credit card is to keep utilization under 30 percent of the credit limit. This indicates that you are a responsible owner and that you know how to manage your finances well. Do this, and you may have good things in store for you:
- You will make yourself a perfect candidate for a better credit card. Do not be surprised if you are offered an upgrade to a gold credit card after just a short time with the standard one.
- Keeping your expenditure under 30 percent of the credit limit is also good for your credit score. This will benefit you when you decide to take out a loan because a high credit score will automatically improve your chances of getting approved.
4. Waive fees
Nobody is perfect. Despite being consistent about making credit card payments on time, certain situations may cause you to miss the deadline.
Missing the deadline instantly comes with a penalty. However, you can actually avoid paying that penalty on your credit card. All you have to do is to call your bank.
If you are a first-time offender and you have good standing with the bank, chances are high that the extra charges will be waived upon your request. You just need to explain the situation well and make an effort to prevent the same thing from happening again in the future.
5. Set up account alerts
Make your smartphone your partner in managing your credit card. Sign up for account alerts so you can get a text message every time your credit card is used.
This is a shrewd move in preventing you from going above your 30 percent of the credit limit allowance, as well as falling victim to fraudulent charges.
6. Have your credit card interest rate lowered
This is a bold move worth making if you have been using the credit card for some time. Just call the bank’s customer service and inquire if it is possible for them to reduce the interest rate.
This tactic typically works for clients with good standing.
There you go – the best tips for becoming the true master of your credit card’s financial power. Follow these tips and, for sure, owning a credit card will bring you nothing but joy and convenience in life.