Credit cards are becoming more prevalent as more and more people obtain them from banks, retailers, and credit card companies. These credit cards can be useful if they are used correctly, but can cause financial issues if they are used incorrectly. Everyone that owns a credit card should know the basic rules of credit card use that will help them use their credit cards in the most effective ways possible. Here are some basic tips to follow when using your credit card.
Avoid Carrying A Balance On The Credit Card
Using your credit card is much cheaper if you pay off the balance of the credit card each month. Credit card companies give you a grace period of around 25 days to pay off the purchases that have been placed on the credit card. If the balance on the card is paid back before the grace period ends, the amount charged will not be subjected to interest and finance charges. If you do make a purchase that you are unable to pay back within the grace period, you should still try to pay it back as quickly as possible to minimize the amount of interest you will be paying on the purchases.
Use Credit Cards Minimally
The less you use your credit card, the less you will pay to the credit card company for borrowing funds with the credit card. Try to restrict the use of the credit card to circumstances where it is truly necessary or when it is your only option. The best way to use a credit card is to only use the credit card for emergency purchases and to pay cash for everything else.
Make All Of Your Payments On Time
Late payments on a credit card account can trigger a number of different penalties, including additional fees, an increase in your interest rate, and a drop in your credit score. Late payment fees can range between $25 to $39 for each time the payment is late and the fees are charged directly to the credit card. Many people pay their credit card bill as soon as it arrives so that they don’t forget about making the payment or miss the payment deadline.
Pay More Than The Minimum
Making only the minimum payments on your credit card is a good way to ensure that you will be paying the credit card company a large amount of money for a long time to come. The minimum payment required by your credit card bill is the cost of the fees and interest associated with the account plus 1% of the current balance. It can take decades to pay off a credit card at that rate. Structure your budget so that you can pay as much as you can on your credit card bill each month so that you can bring down the balance quickly.