The use of credit cards to pay for goods and services has become a near necessity over the past decade as online shipping and cashless payment options continue to increase. According to America’s Debt Help Organization(debt.org) more than 189 million Americans have credit cards and the average household has a balance $8,398. By adopting a few simple habits can allow you to use credit cards to your advantage. Credit cards can be a financial tool if used responsibly. A few advantages of credit cards are cash flow flexibility, reward perks, boosting your credit scores and protection against credit card fraud.
Pay your bill in full every month
It is suggested to pay your credit off in full before the due date to avoid interest. However, this may seem like a challenging task, it’s the No. 1 rule, if you are going to avoid credit card debt. Only charge what you know you can afford to pay back. For that reason, credit cards may not be the best to use for financing large purchases due to high interest rates. Although this can be unavoidable at times, it is suggested to look for a card offering 0% interest rate.
Pay early to Boost Credit Score.
For those that are not able to pay your credit card balance in full every month, pay what you can as far ahead of the due date as you can. Paying your credit card balance before the end of the month will report a lower amount to the credit bureaus. By doing so, can help, boost your credit score by reducing the percentage of your available credit you are using. Additionally, paying early will also save you money on interest.
Credit Card Rewards
Take advantage of all the rewards you can. Credit cards can be an excellent way to earn rewards or cash back on purchases you would already be making. Rewards vary by issuer and card type. Find a card that offers cash back, welcome bonus, points or travel miles. Certain credit cards, even offer insurance on your cell phone as long as you pay your cell phone bill with that card. Some people who don’t travel, can use that money for other purposes like staying out of debt. There are numerous types of credit cards available to consumers. Nevertheless, do your research because not all credit cards offer rewards or perks. Once you choose one, be sure you understand the rewards program to ensure it fits your spending habits. Be sure to use your credit card for items you would normally buy anyway, like groceries, gas, dining out, etc. Therefore, you know you can pay off what you spend and more importantly earn rewards while doing it.