The key feature of a credit card is the fact that when it is used wisely, it will improve your finances by leaps and bounds. It is a tool that can change your financial health. Many a time, the usage of a credit card makes you entitled to price protection, extended warranty, and several other benefits. Like every other tool, if it is not used correctly, a credit card can cause irreparable damage. To help you through that, here is a list of the do’s and don’ts that you must bear in mind concerning your credit card offers.
1) Do pick a credit card due date
Initially, when you get a credit card, the bank assigns you a due date. If you are finding it difficult to remember this date and make on-time payments, go ahead and change the date. Keep it something that you can easily remember so that you never miss a due date. Most banks provide the option of modifying this date on their online portal. Find out the process for your bank and get this done as soon as possible.
2) Don’t carry a balance
Make it a practice to pay off your credit card bills in a month. Understand that your credit card is an unsecured credit. If you do not pay it off at the right time, you will have to pay interest on what you owe to the bank. Although the amount may look insubstantial in the beginning, the same increases over time and will become a financial burden over time. If you are unable to pay the amount, pay off at least a part of it in time and carry a balance. As much as possible, avoid carrying a balance and under no situation should you completely miss a due date.
3) Don’t spend all your available balance
This is another lesson in financial discipline. Make it a practice to not spend more than 20% to 30% of your available credit balance every month. Banks frown upon those people who max out their credit limit every month. Not only does this affect your credit score, but it also hampers your relationship with the bank. For millennials, maintaining a good credit score is of utmost importance given the need for future loans and other such factors.
4) Don’t close your old credit card
Talking of maintaining credit scores, most people do not know that the length of a credit card has a significant role to play here. That is why it is advised that you do not close your old credit card. Keep it active by using it once in a while. By closing a credit card, you will only be bringing down the available credit limit. If such a thing happens, even if you keep spending the same amount, the credit utilization ratio will shoot up.
We understand that you would have invested a lot of time and effort in selecting the perfect credit card for yourself. With the above do’s and don’ts we are confident that you would have used it well too. However, all of that comes to nothing if you do not use the hard-earned rewards. Thus, while you must follow the do’s and don’ts, make sure that you keep track of the rewards and make the most of your credit card benefits as well.
