Credit cards increase you spending power. They can also become a liability if used incorrectly. Credit cards are actually very complex instruments. Not understanding how to use a credit card can lead to revolving debt or poor credit scores. Several tips will help you to get the most from your credit cards.

Never Pay Just the Minimum Amount

The first tip is to never pay just the minimum amount required by credit card companies. Paying the minimum amount each month means that you are really just paying down the interest and a small amount of the principal. This could double to triple the actual amount of money paid for a purchase over time. As much as possible should be paid towards credit card bills every month.

 

Avoid Using Credit Cards for Cash Back

Most credit cards allow you to request cash back from a purchase. Some can even be used for a cash advance at an automatic teller machine. You should avoid using credit cards for cash back whenever possible. The cash that is withdrawn has a much higher interest rate than regular purchases. Cash should only be withdrawn with debit cards or through a standard bank account.

 

KeepCalm Credit CardDo Not Use Credit Cards for Impulse Purchases

One of the largest mistakes that you can make is to start using credit cards for impulse or unnecessary purchases. This is one of the fastest ways to fall into serious debt. Credit cards should mostly be used to cover necessities. Using them to charge large amounts for entertainment or electronics without having the money in the bank first can leave you with overwhelming bills that cannot be repaid easily.

 

Always Compare Offers

It is important to always compare offers once every few months or every year. Credit card companies are constantly creating new products or plans that you can benefit from. When you compare credit cards, you might be able to find a new lender offering better rates or a better plan. Switching to a better credit card such as United Overseas Bank Visa Card and transferring balances can save money.

 

Stay Below the Credit Limit

A way to maintain a good credit score is to stay below the credit limit of the card at all times. It is normally best to stay below 30 percent to 50 percent of the stated credit limit. This prevents the debt-to-credit ratio from being too high. If the ratio is too high for too long, then credit scores could actually drop. If a purchase does take the account close to the credit limit, then the balance should be paid down immediately.

 

Review Statements Every Month

You must review credit card statements every month even if you did not actually use the card. Credit card statements can show fraudulent charges or unknown fees. Reviewing statements every month makes it possible to catch and contest these types of charges. A bill should never be paid without looking at all the charges for the month.

 

Choose a Credit Card with a Rewards Program

Most credit card companies today have some type of rewards program. Not taking advantage of these rewards programs is a serious mistake since the benefits are mostly free. The credit cards that are chosen should have some type of cash back rewards program attached at the very least.

 

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