Credit cards were created to help people, to make purchases in installments, that is, even those who did not have money in hand, could make a purchase, which in the beginning was a great discovery, became the villain of many people.
This was due to the misuse of most people, spending more than their income, lending to acquaintances, and even pushing the limit, which caused millions of people around the world to be in debt. However, among so many mistakes, the lesson arose, to use the card properly and also to avoid attitudes similar to that of people who have defaulted.
Tips for Using Your Credit Card
With so many people in debt, experts and economists came up to talk about the subject, they made public tips that, as simple as they seem, can help people a lot. We will explore four ways to use your card: create credit, earn rewards, pay debts and finance a purchase. We’ll also give you some tips for using your card, so you can avoid accumulating unnecessary debt or negatively affecting your credit.
1 – Use your credit to get credit
Got a little confused? Calm down, we’re talking about using your card sparingly and always paying, so your name credit can go up and you get even more limit. If you are new to using credit or want to improve your credit history less than stellar, getting a credit card can be a good first step for you. There are two types of cards that you can apply for: Secure and Unsecured.
Guaranteed cards require a deposit, which is generally refundable, which is generally equal to your credit limit and will be used as a guarantee. Unsecured cards do not require guarantees and are awarded based on their credibility. Secured credit cards generally have less stringent application requirements than unsecured cards. The payment history for both types of cards is usually reported to the three main consumer credit agencies. Making your payments on time, in full, can help you establish a responsible lending standard and can increase your credit, while late payments can have a negative impact on your credit.
2 – Enjoy the rewards
Over time, credit providers saw that giving rewards made people buy more. There are a variety of reward cards to choose from, including travel, hotel, airline and cash back cards, to name a few. Some studies already conducted show that people who pay for their purchases with a credit card usually spend more than those who pay in cash.
So if you use a credit card to earn rewards, try to use it only to pay for items that you normally buy anyway and that you know you can afford. In addition, many reward cards have an annual fee. If you don’t earn enough rewards to make up for the fee, it probably makes sense to choose a different type of card. Which can be a big savings in your pocket.
3 – Pay your debts
- Right when it was implemented, the credit card was accepted in a few environments and was only for sales. Nowadays it is common to make credit card recharges, pay bills, and even make cash withdrawals.
- The use of a credit card for purchases may seem counter intuitive, as it is one of the ways in which people can accumulate debt. However, when used strategically to cover other debts.
- Many credit cards offer low or no interest balance transfers for an introductory period. If you transfer a high-interest debt and pay it off before the promotional period ends, it can have great value in savings.
- If you use a credit card to reduce debt, we do not recommend making additional purchases with that card until you pay the balance in full. Also, beware of the fees. Some credit card issuers charge a balance transfer fee when you transfer your balance to a different card. If possible, try to find a card that offers an initial balance transfer fee.
4 – Try to use financing
The credit card is not the first option in financing most of the time. But a card with an initial purchase rate of 0% can give you the opportunity to pay a large purchase with no interest. If you are sure that you can pay the balance in full and before the introductory fee ends, using a credit card to finance a purchase may be a good option.
Be sure to carefully read the fine print on any used credit card. Some credit cards offer promotions with deferred interest, which means that if you do not pay your balance in full before the offer ends, you can keep an eye on all interest accrued during the promotional period. Other cards may only charge interest on the remaining balance, but they can still accumulate quickly. So, if you are a person who was losing control, take advantage of the tips and save!