Greetings fellow credit card users! We want you to know that credit card etiquette is extremely important, regardless of whether you’re a college student just getting started with credit or are unfamiliar with Norway’s credit system. To avoid financial difficulties that can affect your credit score, it helps to arm yourself with as much information as possible.
Keeping this in mind, we have compiled the following list of credit card do’s and don’ts. If you follow these guidelines, you’ll soon be a credit expert.
First let’s talk about the do’s, shall we?
Keep track of when bills are due
The most crucial aspect of credit card usage is timely payment. When you have many accounts, it might be difficult to keep track of their respective due dates. Keep in mind that you can try phoning customer support to see if they can move the due date. This can be useful for avoiding a slew of due dates at the end of the month.
Don’t forget to make use of the services offered by your bank, such as automatic bill payment and bill reminders. This can assist you in keeping your payments on time. The most common method of automatic payment is with a credit card.
The amount of your bill will be deducted from your account automatically. Bill pay is a service provided by your bank or credit union that gives you greater discretion over your financial transactions. Then, make sure you never miss a bill payment by setting a reminder.
Check your statements
Don’t just dismiss your credit card statements because you have auto pay and paperless billing set up. If you don’t recognize a transaction, it may be an indication of fraud, and you may miss key information about your account, such as a change in your interest rate or the predicted interest charges on your current amount.
Pay more than the minimum payment
We want you to know that the purpose of a minimum payment plan is not to reduce debt quickly. As a matter of fact, the goal is to prolong your debt for as long as possible so that the credit provider can earn as much as possible. Yikes! However, you’re not obligated in any way to stick to the minimum payment plan.
You should always aim to pay more than the bare minimum due on your monthly statement. Interest fees can be reduced if the debt is paid off early. Basically, using credit saves you money in the long run.
Know when you must pay to use credit cards
Any purchases made during a billing period in which there’s no outstanding balance will not accrue interest. If you pay your balance in full each month, you will never have to worry about paying interest. It’s the cheapest way to make use of credit.
The “grace period” on some credit cards is an additional grace period during which no interest will be charged. It’s typically between fifteen and twenty days following the payment deadline. The current billing cycle will begin after the previous cycle’s debt is paid in full. You can try a kredittkort test to see whether getting a brand new card will make you more financially responsible.
Contact creditors and ask for a reduced interest rate
In contrast to loans with a set interest rate, credit card APRs can fluctuate. This means that the rates will fluctuate in response to any changes in the prime rate set by the Federal Reserve. Although fixed-rate credit cards are not common, they do exist.
Credit card interest rates that fluctuate might sometimes benefit the cardholder. You can contact your creditors and ask for a reduced interest rate. This is something you should do on a regular basis, especially if your credit has improved since opening the account. To request a lower interest rate, simply contact customer support and explain your situation.
Get credit cards when you really need them
When used wisely, a credit card can be a convenient financial instrument. However, this means that you shouldn’t create a new account unless you have a clear plan for how to use it. A credit card that offers travel perks could be useful if you do a lot of traveling. Because some accounts only give cash back on certain transactions, you can have a separate card for gas and another for groceries.
Now that we’ve covered the do’s, let’s talk about the don’ts!
Avoid maxing out your credit cards
This can low-key be disastrous for your financial reputation and debt management skills. When calculating a credit score, credit utilization is the second most crucial factor. It’s a ratio of how much of your total available credit you’re actually using. A decent rule of thumb is to never use more than 30 percent of your available credit at any given time. However, it’s not a good idea to use your credit cards to their maximum limit.
Avoid rewards credit cards if you can’t pay off the balance
We’re all in it for the rewards, but not always the savviest approach. Earning 1.5% cash back on a purchase means little if you have to pay 20% APR for numerous billing cycles. If you make the identical purchase but charge it to a credit card with a lower annual percentage rate, you will save money on interest costs even if you pay off the balance early.
When using a rewards credit card, it’s ideal to pay off the entire balance every month. Avoid using a credit card only for the sake of accruing points. It’s a risky move that could put a strain on your finances. Follow this page for more info.
Never rely on credit as a source of financial stability
This is a terrible credit card misstep that can lead to serious financial difficulties down the line. If you don’t have enough money to cover your regular expenses, using credit to do so won’t solve the underlying problem. And you’re only making things worse. Since credit card debt is recurring, the minimum payment due also grows as the balance does.
Your credit card payments will rise as you charge more of your regular expenses, leaving you with less money to spend. That implies you’ll have to run up some more bills to pay for the following month, resulting in a slippery slope to the bankruptcy court.
Stop charging if this is happening to you, and start a budget. Seek the advice of a credit counselor if you feel stuck in an endless cycle of debt.