💳 My 4 Rules For Getting a Credit Card
Credit cards can be incredibly powerful tools when used wisely, but they can also lead to financial headaches if not managed properly. Over the years, I’ve developed a set of rules to help navigate the often overwhelming world of credit cards. Whether you’re new to credit or looking to refine your strategy, these guidelines will help you make smart choices and keep your finances on track.
Before we dive in, if you have struggled with credit card debt in the past, it may be best to just sit this one out. No rewards or points are worth you screwing up your financial situation.
1. Focus on Simplicity First
When it comes to managing credit cards, simplicity is key. It’s easy to get caught up in the allure of rewards programs and special offers, but if you’re not careful, you could find yourself juggling multiple cards with different due dates, interest rates, and terms. My advice? Start simple.
Unless you’re specifically looking to maximize points through various rewards programs, stick to just two credit cards. This approach makes it easier to keep track of your spending, stay on top of payments, and avoid unnecessary complications. With fewer cards, you reduce the risk of missing a payment, which can negatively impact your credit score. Plus, it’s one less thing to stress about in your busy life.
Start with 1-2 cards. Then if you are interested in optimizing for points and miles you can expand (I usually carry 2-4).
2. Get the Best Card Your Credit Score Will Allow
Your credit score is your golden ticket to the best credit cards on the market. The higher your score, the better the terms and rewards you’ll qualify for. That’s why it’s essential to always strive to get the best card your credit score will allow.
If you’re just starting out and have no credit history, you may need to start with a secured card or a card designed for building credit. Use it responsibly, and over time, your score will improve, opening the door to better cards with more perks.
For those with an established credit history, don’t settle for less. Research the best cards available for your score range, considering factors like rewards, additional perks, etc. The right card can offer significant benefits, from cashback and travel points to balance transfer offers that save you money.
P.S. If you want to see all the cards I love, Here is my link. It is an affiliate link that helps support Master Money. Thank you! :)
3. Manage Fees by Downgrading When Necessary
Annual fees can quickly add up, especially if you have multiple credit cards. While some cards offer perks that justify their fees, others may not be worth the cost over time. If you already have a few cards and they come with annual fees, consider downgrading them to the free version before adding more cards to your wallet.
Downgrading a card allows you to keep your credit history intact without incurring the cost of annual fees. This is important because the length of your credit history plays a significant role in your credit score. Rather than canceling the card and losing that valuable history, simply call the card issuer and request a downgrade. You’ll keep the account open, maintain your credit line, and avoid those pesky fees.
4. Use Them as a Tool for Money Automation
Credit cards can be incredibly effective tools for automating your finances. By setting up automatic payments for your bills and recurring expenses on your credit card, you can ensure that everything gets paid on time without having to manually track each payment. This not only simplifies your financial life but also helps you build a consistent payment history, which is crucial for maintaining a strong credit score.
Additionally, using a credit card for automated payments can allow you to earn rewards on your regular expenses, turning everyday purchases into cashback or travel points without any extra effort. Just be sure to automate the payment of your credit card balance in full each month to avoid interest charges. This way, you’re leveraging the power of credit cards to work for you, not against you.
Remember:
Credit cards are more than just tools for making purchases—they’re instruments for building credit, earning rewards, and managing cash flow. But with great power comes great responsibility. By focusing on simplicity, maximizing your credit score, and managing fees effectively, you can make credit cards work for you, not against you.
