Tips on how to use a credit card wisely

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TIPS ON HOW TO USE CREDIT CARD WISELY

Here’s are few steps how you can use your credit card wisely:

1.Choose The Right Credit Card – There are plenty of credit cards with numerous features and benefits associated with them. One thing to realize is that no single card can promise all features or let’s assume even if it does, not all features are going to be relevant to you. Hence, it is extremely important to compare and check the credit card features before applying to ensure it suits your requirements and also gives maximum benefits based on your spending habits.

2.Keep Credit Card Balances Low – The higher your credit card balance in relation to your credit limit, the worse your credit score will be.

3.Consolidate Cards to have Fewer Balances – To maintain a good credit score, the combined credit balance should be within 30% of your combined credit limits. Even if you plan and pay it off within the available time frame, using more than 30% of the credit limit is risky. Maintaining it below 30% usage is a good way to keep a balanced credit score.

4.Pay Bills on Time – Use wisely, pay timely. Your payment history accounts for 35% of your credit score. No late payments, no cheque bounces, no negative balances, successful auto-debits for installments. Make sure you pay every bill on time, every time.

5.Manage All Your Debts Equally – Treat all the open debts with equal importance. It isn’t that a default or delay in loan installment will have a larger impact than for a credit card or vice versa. All debts are equally important to be managed and paid within scheduled deadlines. Every debt plays an equal role in crushing or building your credit score.

6.Try Paying Your Debts in Full, when possible – Making full payment of dues well before the due dates implies financial stability and strength. Hence, whenever possible, make the payments in full. In case the situation is not favoring full payment, make sure to at least pay the minimum due amount.

7.Keep Checking Your Credit Score – To err is human. It is always advisable to check credit score after reasonable durations, at least once a year. As there are several factors in line having an impact on the credit score, keeping a check on score may timely highlight if there is an issue for any given reason so that it can be worked upon.

8.Learn About Factors That Adds-up To Good Credit Score – Things that affect your credit scores are Payment history, level of debt, credit mix, credit age, and recent credit. The more you learn about how to strike a balance in all these aspects, the easier it will be for you to maintain a good credit score.

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