These days, credit cards are driving the consumer market all around the globe. This is a mode of payment that yields benefits like car rental coverage, cash-back points, and automated payments just to simplify our lives.
However, a user needs to be aware of the ways in which a con artist can misuse these credit cards. It’s truly essential as these cards can yield disastrous outcomes when misused. With cards depicting high APR, you may find it tough to pull out of your debt burden. Avoiding debt is your only way out this problem.
You may do your research on using credit cards if you really wish to handle them responsibly. You may come across several online resources illustrating the use of credit cards regardless of whether you’re applying for your first card or is paying off dues to improve your credit rating. While repaying your credit card debt, you must arrive at an affordable minimum payment like when you calculated your personal loan EMI.
Know how to use your credit cards from now on:
1. Repay Your Credit Card Balance Each Month
You must stay focused on repaying your credit card dues every month. You shouldn’t find an excuse since it charges more out of your bank account once you fail to live up to these payments.
You’ll need to bear an interest worth up to 25% based on the outstanding credit balance if you fail to make a payment or opt for making a minimum payment.
You can only keep high rates of interest from piling up if you pay off your dues each month. You must also refrain from skipping a payment. You might have to pay a penalty interest (up to an APR worth 30%) in case you miss out on a due date. Your credit score takes a hit when you actually need to pay a penalty.
2. Restrict Credit Utilization to a bare minimum
Apart from improving your credit score, it will even help in restricting your debt. Credit utilization is the metric that constitutes a large portion of your credit score. Your FICO score tends to rise when your credit utilization falls.
For instance, your credit utilization looks great when it’s valued at 16% after you’ve used 2 credit cards with a balance worth $600 and a combined limit of $3,100. In order to fetch the maximum benefits, you may choose to restrict it below 30%. While avoiding the risk of acquiring debt, you’ll even enjoy an improved credit score.
3. Avoid Using Multiple Credit Cards Simultaneously
You may be lured by the benefits of opening several credit cards especially when you’re seeking the advantage of being a new cardholder or attempting to redeem reward points. You may be thrilled to make the most of cash-back or 0% APR offers. However, you must refrain from opening multiple accounts till you’ve learned to use a single card responsibly.
Chances of overspending get increased when you have several cards in your arsenal. You may even miss out on a due date. You must restrict the number of cards in your wallet as you won’t like to fall prey to any of these incidents.
Credit cards are indeed a very useful tool when you know how to use them properly. By considering the tips mentioned above, you may certainly walk a step forward and repair your credit rating. It will help in securing the financial future of your loved ones.
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