π³ 10 Rules for Credit Cards
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Pssst. If you want to see our favorite credit cards click here and select top credit cards at the top!
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1. Choose the right card for you:
When it comes to credit cards, one size doesn't fit all. Whether you're jet-setting around the globe, hunting for the best cashback deals, or indulging in retail therapy, there's a card tailored just for you. You need to choose the right card for you.
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- Travel
- Cashback
- Shopping Experience
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And for those navigating the choppy waters of debt, fear not; we've got a special recommendation coming your way.
2. Always Have 2 cards:
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In the unpredictable world of finance, it's always good to have a backup. Having at least two cards, especially from different banks, can be a lifesaver. Not only does it act as a safety net during economic downturns when banks might get stingy with credit limits, but it also ensures you're never left stranded if one card goes missing. Plus, diversifying your cards can give your credit score a nice little boost.
3. Pay It Off:
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The Weekly Challenge: Debt is like quicksand; the more you struggle without a plan, the deeper you sink. That's why it's crucial to pay off your balances in full every month. But why stop there? I make weekly payments to stay on top if it.
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Why?
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Making weekly payments not only keeps you accountable but also ensures you're always one step ahead of those pesky interest rates. Remember, when it comes to compound interest on debt, it's like a game of tug-of-war, and you don't want to be on the losing side.
4. Keep It Low and Slow:
Your credit utilization rate, which is the ratio of your credit card balance to your credit limit, plays a pivotal role in your financial health. Those with credit scores over 790 often maintain a rate of 7% or lower.
By keeping your balances low, you're not only making your monthly bills more manageable but also paving the way for a gleaming credit score.
5. Know Your Rate:
In an ideal world, we'd all pay our credit card balances in full and never have to worry about interest rates. But life happens. If you ever find yourself carrying a balance, it's essential to know which card will be kindest to your wallet.
With some cards having variable interest rates that can change like the tides, staying informed can save you from unexpected surprises.
6. In Debt? Enter the Secured Credit Card:
Debt can feel like a dark cloud, but there's always a silver lining. Enter the secured credit card. A secured credit card is a way to build back up your credit while using a credit card
By depositing money as collateral and then responsibly spending and repaying, you start to build up your credit, one swipe at a time. But, you have to also pay off that debt which is a financial emergency.
7. Balance Transfer Cards:
If youβre like me, you probably receive credit card offers in the mail pretty often that tout 0% APR periods on balance transfers and new purchases. Itβs really important not to mix the two.
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If you open a credit card to take advantage of a 0% APR balance transfer period, be sure that you DO NOT also use that same card for new purchases.
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Not only does this defeat the purpose of the balance transfer, which was likely to alleviate the pain you were feeling from existing credit card debt, it also opens you up to new credit card debt that may not be eligible for that same 0% period.
8. Avoid Closing Old Credit Card Accounts
Don't Close Old Accounts: Out with the old and in with the new? Not so fast! Before you snip that old card, consider this: closing it can impact the average age of your credit lines and your overall credit limit, both of which play a role in your credit score. That old card, collecting dust in your drawer, is a testament to your creditworthiness. Treat it with respect.
9. Keep 'Em Active:
In many cases, deciding to keep your old credit card accounts open may not be enough.
Many card issuers will close inactive credit card accounts after months of inactivity, so finding a way to use them in your monthly spending (even if they have crummy rewards and a high-interest rate) is important.
There are a couple of simple strategies that can ensure your rarely-used credit cards stay βactiveβ in the eyes of the issuer.
Set a calendar reminder to use your card at least once every six months. Make a small recurring purchase and set up automatic payments.
10. Credit Over Debit:
The Safety Game: In the modern age, safety is paramount. While both credit and debit cards have their merits, when it comes to fraud protection, credit cards reign supreme. With more lenient policies and better protection against unauthorized transactions, credit cards offer peace of mind in a world where financial security is gold.
Bottom Line: Credit cards, when used responsibly, can be powerful allies in your financial journey. Know the rules, play the game right, and the rewardsβboth literal and figurativeβwill be yours to enjoy.
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