The credit card is perhaps one of the most dreaded and misunderstood financial instruments.
The financial landscape is littered with users who don’t understand how to properly use it and end up landing themselves deeper into debt. Then there are those who fear using it because of the tales they’ve heard.
And this trend is increasing among the younger users. Indeed, according to Chime’s recent survey, almost 70 percent of millennials prefer debit to credit. Many avoid using it altogether.
However, such behavior might be too extreme. If used and understood properly, a credit card can be an extremely valuable financial resource. Therefore, we present a set of do’s and don’ts that you need to consider while using credit cards.
Consult your credit history before you go for a credit card
It shouldn’t come as a surprise to you that those with the best credit are the ones who end up with the best terms and reward offers when they apply for credit card. So, do check your credit score before you apply to get an accurate sense of the kind of deal you may receive.
Read the terms and conditions before applying
One of the biggest mistakes people can make while applying for the credit card is ignoring the terms and conditions. Before you sign, read the terms and conditions document carefully. Make sure you understand each and every one.
Pay the credit card bill regularly
Your credit card bill is just as important as any other utility bill, perhaps even more so since carrying the balance to the next month may raise the interest to unaffordable levels.
Keep a record of transactions
Keeping track of the purchases made on the card is highly important. It prevents you from becoming a victim of fraud or unauthorized use.
Try to go for the credit card with the lowest interest rate
Don’t buy what you can’t afford
This is the simplest rule to avoid mounting credit card debt. Having a credit card doesn’t allow you to buy whatever you want. Remember, at the end of the day, you’re paying much more for your shopping than you normally would because of the interest.
Don’t miss the payments
Another simple tip is to pay your bill on time. Missing it and carrying a balance means much higher interest. And don’t forget a noticeable fee for paying late as well.
Don’t carry a lot of cards
You don’t need more than two. If you carry a lot of cards, it’ll be extremely difficult to keep track of all of them.
Don’t apply for cash advances
Cash advances carry much higher interest rates and much more additional fees. Plus, there is no grace period, which means that you have to pay interest on the borrowed amount even if you make timely payments.