Nowadays, almost everyone owns a credit card. Although these plastic cards are an important part of our lives, not everyone knows how to use them wisely. Using credit cards the right way is necessary to ensure that you do not end up in a cycle of debt. To make sure that you do not fall into the plastic money trap, you should follow these tips:
Pay More than the Minimum
If you try and fail to clear your credit card debt by the conclusion of a billing cycle, you should pay as much as you can. When you pay the minimum only, it will take a considerably long time to finish paying off debts because you will only be paying interest instead of the balance. If possible, you should pay double the minimum to clear the outstanding balance faster.
Negotiate Lower Rates
If you have a good credit rating, you will get appealing credit card rates from different banks in the mail. Before you even think about closing an old account to open a new one with lower rates, you should ask your old provider to match the promotion. You can do this by calling their customer care service, explaining that you have gotten a better offer, and are considering closing your account with them. Most banks will lower their rates of interest to keep the good customers.
Think before Transferring
Credit card companies invented balance transfers to remain in business. To gain new customers, they offer incentives such as 0 percent interest for a limited period. If you opt for a balance transfer, these low interest rates will only last several months to a year before the higher rate of interests kick in.
If you can finish repaying your debt before the interest goes up, a balance transfer is the right choice for you. Make sure that you keep an eye on the APR because it will count in the end. Some banks also charge a transfer fee, which can be as much as 4 percent of the balance.
Pay Bills on Time
Make sure that your credit card bills are paid on time. Whenever you miss a deadline, you will have to pay hefty interest rates on the balance. If you have a steady job and earn a steady income, you need to consider setting up a direct debit account for paying your bills on time. This prevents late payments, especially if you are always forgetting to pay your bills on time.
Look for the Best Deals
When it comes to giving special concessions, banks are always trying to outdo each other to win customers. Most credit cards usually charge an annual fee but might be willing to waive it if you ask. For this reason, you should shop around for credit cards until you find the right one for your needs.
When shopping for a credit card, you should look for one that reports to the major credit bureaus, charges no annual fee, does not charge for the application and has the lowest interest rates.
Look out for Hidden Fees
By law, banks are not allowed to hide charges when issuing credit cards. To get around this law, they provide the information in a way that a person without law knowledge cannot understand. If you do not watch out for late fees, processing fees, and transaction fees, you will be stuck with enormous debts.
The above tips will come in handy if you are looking for ways to use your credit card wisely. You just need to ensure that you get the right card for your needs and look for hidden payments.