A credit card is a revolving credit line that allows you to charge purchases at any time up to the credit limit. If used responsibly, credit cards can be a handy way to pay for purchases but can lead to spiraling debt if a healthy approach to credit is not established. Follow these best credit card practices to manage credit cards more efficiently.
Take the Time to Review Your Statement
Whether you get a paper or online credit card statement, it is important that you review the statement. Reviewing the statement will allow you the opportunity to look at the charges, interest and payment due date. If anything looks “off” about the statement, contact your credit card provider for assistance. When reviewing your credit card statement, pay attention to the payment date as well as the closing date. The closing date is the last day that a charge will be applied on the statement. After the closing date, any new charges will carry over to the next month’s statement. The payment date is the date when the charges for that statement period are due. Keep in mind that the billing cycle dates will vary from one credit card to the next. This will be useful when determining the amount you can responsibly charge within a billing cycle.
Pay Your Bill in Full
If you do not pay the outstanding balance in full, interest as outlined in your credit card agreement will be applied. The minimum payment amount can be quite small compared to the overall balance owing. Paying just the minimum may cost you a lot in interest in the long run. To figure out how much interest you’ll be charged per day, take the Annual Percentage Rate and divide it by 365. Paying your bill on time and in full will lower your overall credit usage and positively impact your credit score.
Make Timely Payments
One of the most important credit card practices is to make your payments on time. If you do not pay your credit card bill by the due date, there could be serious consequences. You will likely be charged a late payment fee. Late payments reported to the credit bureaus can lower your credit score and make it more difficult to obtain credit in the future. Having a system in place to avoid going late may help you make sure your cards are consistently paid on time.
If you pay your bill by direct debit, the payment can be processed on or before the due date. Most credit card companies will allow payments to be pre-scheduled online. If you are not comfortable with automatic debit payments, consider setting up a reminder at least five days before the due date so you do not miss your payment. By paying your bill on time, you will avoid interest, late payment fees and dings to your credit score. One of the ways many consumers end up with excessive credit card debt is by simply missing a payment or two. When payments are consistently missed, the amount paid in late fees can really add up.
Stay Within Your Credit Limit
In addition to making your payments on-time, it is important that you keep your credit card balances low in relation to your available credit. Many credit card companies charge a fee for being over the credit limit and report the over limit amount to the credit bureaus. Low balances show responsible use of credit and will help increase your credit score. Also, if your balance remains low, it will be more likely that you will be able to pay your outstanding balance in full.
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The Law Office of Barbara B. Braziel helps people get out of debt. We offer free consultations to people of Savannah, GA and the surrounding areas, including Richmond Hill, Hinesville, Pooler, Port Wentworth, Tybee Island, Clyo, Ellabel, Midway, Ludowici, Springfield, Pembroke, Brooklet, and Garden City.
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