In 2014, 72 percent of Americans had one credit card in their wallet with 18 percent having three to four. Chances are you have one or more cards in your wallet, yet, can you be sure you’re building smart credit?
Most likely, you could be using your credit card better – read on to find out how.
Tips on Using Your Credit Card to Your Advantage
Credit cards are a great tool when they are used properly. You can take advantage of reward programs, easy bill pay, account perks, and building credit all from one card.
What type of reward program does your current credit card offer? Does it offer high cash back? Airline miles?
Reward programs earn cash back from one to two percent for general purchases. Some programs go as high as five or six percent for specialized categories.
If you use your credit card regularly, make sure to compare rewards programs to get the most of out your card. You could be missing out on hundreds of dollars every year if you don’t check.
Airline miles are also a hot commodity in rewards. These programs may also offer other travel rewards such as free hotel nights as well. Bonuses can add up quickly when it comes to airline miles. You could be halfway to a ticket just for signing up.
Check what type of rewards matter to you so you can start earning your smart credit points as soon as possible.
Paying your credit card bill in full every month is extremely important when it comes to building credit. Once the bill comes in the mail – pay it all. The interest that accumulates on the card is where people get into trouble. The rates can be over 18 percent, which adds up quickly.
Don’t overuse your credit card and only purchase what you can afford. One easy trick to do this is to save up the money in your bank account before you make a large purchase.
If you are trying to build your credit, paying your bill on time is essential, but sometimes mistakes happen. Check the small print to see if there is a grace period for late payments before you get hit with the interest. While it is not good to use this grace period often, it can help in case of an emergency.
Check Your Account
Log in to your credit card account to see where all your money is going. If you’re on a strict budget, you might find it easier than keeping receipts. Look at your account at least once a week to make sure your balance stays in check.
Checking your account will also let you know your credit score (for most credit cards). Keep an eye on your credit score. It will let you know of any suspicious activity so you can notify the credit bureaus as soon as possible.
Many credit card companies have budget tools, spending trackers, and other tools to keep track of where your money goes. Graphs, charts, and alerts are helpful if you are a visual person. Some companies also include SMS alerts when you overspend.
Keeping track of your account is simple if you use the tools smart credit card companies provide you.
Sign On Bonus
When looking at smart credit, be sure to check the sign on bonus. Credit card companies are competitive and want new customers which means big bonuses for you. Some of the most common sign-on bonuses are:
- Flyer miles
- Valuable points
Sometimes you can negotiate your sign on bonus with different companies when comparing them against each other. Find a couple competing cards that fit your spending style, check the sign on bonuses, and call the companies up and talk to a representative.
If they want your business bad enough, they will work with you. The company might go above and beyond their advertised bonus if you have a good credit score and history.
Now that you have the tips to using credit cards, read on how they are a smart choice.
How Using Credit Equals Smart Credit
Credit cards work for you in many different ways, so you can protect yourself while building credit.
As long as you pay off your credit card every month, you can use it as a payment method for your bills. You have to pay your bills anyway, so why not build credit and reap the rewards?
If you are making large purchases, you can cash in the rewards quickly. Make sure to have the money saved up before the purchase so you can pay it off without accruing interest.
A credit card can also be used for large emergency purchases, such as a repair to your vehicle or a hospital visit. Make sure to pay it off as soon as possible to keep up your smart credit habits.
Many credit cards protect you against bad merchants. If what you ordered is completely different than what was described, or the order didn’t make it to you at all, you can dispute the charge.
These services are completely free. All you have to do is call up your credit card company.
Once the company looks into your claim and finds it valid, your money is returned to you. It’s a nice insurance policy and gives you peace of mind while shopping online.
Since the money is not taken out of your bank account like a debit card, the amount you are disputing will not overdraft your account. If you have bills that come out of the credit card, make sure to pay those with your bank account while disputing the charge.
Rental Car Insurance
Don’t want to purchase rental car insurance? You won’t have to if you have a credit card. Most cards come with standard no-cost collision damage when you use it to pay for the rental.
All you have to do to activate this coverage is decline any optional insurance policy the rental company tries to sell you. Read the fine print to make sure the type of car you are renting is covered – often luxury cars are excluded.
Some cards go beyond the basic rental car insurance and offer travel insurance as well. When planning your next vacation, book it with your credit card to protect yourself against unexpected events while traveling.
Every company has a different policy, but it will save you from having to purchase extra travel insurance from travel companies.
Building and increasing your credit score is a smart credit strategy everyone should take advantage of. Having a solid credit card history shows lenders you are responsible when you go to purchase a car or a house.
Every time you make an on-time payment on your card, the company will report it to the credit bureaus. Debit cards don’t appear on your report. To build up a solid history, you need to use a credit card.
If you do want to cancel your card, make sure to do it properly so it won’t hurt your credit. Make sure the entire balance is paid off before you call your company to cancel the card.
Some cards allow you to cancel through their app while others make you call and talk to a representative. Write down the day, time, and who you talk to when you cancel the card.
When the confirmation and final statement comes, keep it. If you do not receive either of these, call the company to follow up and see if your account was closed properly.
Other Options Besides Credit Cards
Want other smart credit options? Payday loans are a good choice if you need a quick way to get money. Decisions for loans are made online, in a few minutes, and the forms are simple to fill out.
The money can be transferred right into your bank account so the funds are available in as soon as the next business day.
Choose the amount of time you want to pay your loan back in. The terms are flexible and you can borrow up to $5,000. Some companies don’t even require a credit check – making it a smart credit choice.
Manage Your Money Better with Credit Cards
Smart credit choices start with learning the tips, advantages, and options with credit cards.
Making the right choices, comparing companies, and taking advantage of the rewards can make your credit card work for you.
If you are looking to rebuild your credit or use the rewards, check out the credit card options we have for you.