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Credit card can be a useful financial tool. But when you are new to using them, they can be intimidating. Here are some tips for getting the most out of your credit cards without inadvertently getting into debt.
1. Check your balances weekly
The advantage of credit cards is that they make it easier to track your spending than when you pay cash. When you drop a stack of bills to pay for a purchase and lose the receipt, you can quickly forget how much you spent. But when you use your credit cards, there is always a record of your purchases. All you need to do is log into your account and review your spending.
And speaking of signing into your account, it’s a good idea to check your credit card balances on a weekly basis. It might sound like overkill, but if you follow this advice, you are less likely to end up spending too much money and building up a balance that you can’t pay in full.
Suppose you are in week 3 of your billing cycle and notice that one of your credit card balances is higher than expected. This can serve as a warning to minimum spend until the next billing cycle so that you don’t end up with a balance that you are forced to carry.
2. Look for revolving reward categories
It is common for credit cards to offer different incentives, such as cash back on the purchases you make. But some cards have revolving reward categories where you can earn bonus points for specific types of purchases at certain times of the year. And it’s worth taking advantage of these categories as they appear.
Imagine that one of your credit cards normally offers 1% cash back on all purchases, but it offers 5% back on hardware store purchases in the first quarter of the year. If you renovate and stock up on supplies, you will earn bonus money just for using this rewards card.
3. Request a credit limit increase once your income increases
Having a higher credit limit won’t just give you the ability to spend more (which may or may not be a good thing). It can also help keep your credit score in favorable territory.
An important factor that goes into calculating credit scores is use, or the percentage of your total credit limit that you use at one time. So the higher the limit you are eligible for, the easier it will be to keep your usage low. That’s why it’s worth asking for a higher spending limit if your income goes up. You can also request a credit limit increase once your account has been open and in good standing for six months or more, even if your salary isn’t moving much or not at all.
4. Don’t let the rewards expire
Some credit cards offer rewards that never expire, but that isn’t always the case. Read the fine print of your rewards program carefully, and if you have any rewards with an expiration date, write it down on your calendar. That way, you won’t pass up the benefits you’ve earned.
Credit cards could help you manage your finances better, build a strong credit history, and earn bonus money for things you already buy. Follow these tips to get started with credit cards on the right foot.
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