When used incorrectly, credit cards can be an expensive way to pay for goods and services. The golden rule of credit card use is to pay off your full balance on time each month. If you do, your credit card will become an excellent financial tool, as it provides additional protections, gives you an accounting of transactions, allows you to carry less cash and helps you earn rewards.
Here are some of our other favorite credit card tips and tricks:
Sign the Back of Your Card Immediately
Your credit card has a signature strip on the back for a reason. It proves you are the cardholder and allows you to verify your identity if your card is lost or stolen. If you do not sign your card, anyone who finds it can sign it and pass it off as theirs. Thus, for security purposes, it is important for you to sign your card.
Become an Expert on Your Rewards Program
Do you know all of the details of your rewards program, or do you just swipe your card and hope to earn great benefits? Many people are surprised to see rewards accumulate in their account, and many more do not know how to use these rewards points to their full advantage. Some cash back credit cards have revolving categories, which means they offer more rewards for certain goods at different times of the year. For example, some cards might offer 2% to 5% cash back on fuel purchases made from July through September, as more consumers are traveling during the summer months. If you know when your credit card rewards will change, you can adjust your spending habits to earn more rewards.
Some credit cards always offer more points for select purchases. If you know the details, you can use your credit card for expenses that will earn you the most points. If a card gives you three points for ever $1 spent on utility bills, make sure you pay your water, electric and other utilities with that card. If another card offers 10 points per $1 spent with a particular airline, make your travel plans with that airline. The more you know about your credit card’s offers, the more rewards you can earn.
Use Your Credit Card Regularly
Many people are wary about using their cards, because they do not want to get trapped in debt. This is a legitimate concern, but if you are planning to make a purchase, it is best to use your credit card. As long as you have the money to cover the purchase, you are not doing anything wrong because you can pay off the card immediately.
It is important to use your credit card regularly for a number of reasons. First, as long as you make on-time payments, using your credit card will increase your credit score. Secondly, if you have consistent activity on your account, you may earn access to an increased credit limit. Finally, using your card will increase the number of credit card rewards you can earn.
Monitor Your Accounts
You will want to register your card online so that you can monitor your account more easily. You may also want to download your issuer’s mobile app, as this resource will also help you watch for unauthorized charges. You can enroll in text or email alerts every time a transaction is complete, so you will know immediately if someone is using your card. It is considerably easier to take care of fraudulent charges if you catch them right away. If you pay attention to your account, you can avoid unnecessary problems.
Do Not Spend What You Cannot Pay Back
It bears repeating that you should only use your credit card when you can pay off the balance in the foreseeable future. If you charge a purchase with the plan to pay it off “eventually,” you will soon be in deep debt. Instead, you should come up with a plan for paying off your balance and make these payments on time every month. Of course, it is best if you already have the money in your checking account to cover the purchase so you can pay your balance immediately. Then, you will get all of the benefits for using your card, but you will not have to pay interest.