Credit cards can be useful tools or the devil’s playground depending on how they are used. You can consider them your frenemy. For example, using a credit card can help you obtain a “short-term” loan to cover costs when you don’t have the necessary cash in hand. However, using it irresponsibly can drag you into a swamp of debt.
The following credit card tips can help you make the most of your card(s) and avoid common pitfalls.
Create a password for your card
One of the first things you should do is create a strong, secure password to protect your card. Many credit card issuers do not offer password protection as a standard so you may have to request it.
Avoid using guessable passwords such as “password” or anything with your personal information such as your name, birthday, phone number, or email address. You should also avoid using the same password used on any other accounts. Once the password is set, your card will be protected from any potential threats or attacks.
Sign the card
You will find a small strip on the back of your credit card where you are to sign your name. Make sure you do this immediately, as this can protect your card in the event it gets lost or stolen. In addition, some retailers may require signed cards to complete transactions.
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Use it only when necessary
A credit card should be seen as a helpful tool for urgent matters such as an emergency. Consider it a cushion of support—not something you use to finance big shopping sprees.
If possible, try to pay in cash. Using cash as a payment method can even help you save money. By physically feeling the cash leaving your hand, you realize how much you’re really spending. As a result, you may be more likely to resist impulse purchases.
Monitor your usage
It can be surprisingly easy to miss a credit card payment or to not pay off its balance at the end of the month. Either of these can trigger substantial fees. It’s essential to keep track of all your payments and be sure to budget enough to pay off your balance when it’s due. Autopay provides a great way to help ensure you pay on time.
Technology offers a variety of ways to keep track of your spending. Most credit card companies have their own mobile apps, which typically contain an overview of your recent purchases. You can also download a free budgeting app or personal finance software for easy access from your smartphone, tablet, or computer.
Watch your interest rate
Many credit card issuers will tempt you into signing up for their cards with a low “introductory” interest rate that often goes sky-high when that promotional rate expires. Be sure to check out the interest every time you receive a statement to make sure you’re paying what you agreed to. As a word of warning, remember that some cards may automatically assign you a much higher interest rate if you miss a payment or exceed your credit limit.
Remember that it’s not free
You must always remember that credit cards are not free. The limit on your credit card does not mean you can spend that amount of money free of charge. Whatever you charge on that card—as well as any interest—must be paid back in full.
In some cases, your bank might increase your limit if they consider you a responsible borrower or even if you have reported an increase in income. Some banks will notify you of the change and give you the option to accept the opportunity or deny it, while others will do so without first asking.
A higher credit card limit can encourage additional spending, but this can work in your favor if you manage your spending correctly and stay on top of monthly payments.
Accept only what you need
You may be bombarded with credit card offers but this doesn’t mean you should accept all of them. The more credit cards you have, the tougher it becomes to keep track of your payments, due dates, and balances.
Before taking out a new card, it’s important to ask yourself if you can handle juggling another one. If you already struggle with managing your existing cards, opening a new account may not be the best idea.
Pay off your balance(s) every month
Paying off your balances every month is perhaps the most responsible way to use your credit cards. Making only the minimum payments often leads to debt, which can become more difficult to manage and pay off over time. In most cases, that minimum payment will be only enough to cover the interest you’ve been charged and won’t reduce your balance.
Help is available
If you are struggling with credit card debt, enrolling in a debt relief program can help you get back on your feet. National Debt Relief can create an affordable payment plan that best fits your needs while also negotiating on your behalf to reduce debts. You could end up paying only a fraction of what you owe and may be debt free in as little as 24-48 months, depending on your debt amount. Get a free savings estimate here.