10 Money-Saving Ways to Use Your Credit Card
Your first credit card is a powerful tool in building wealth and establishing an excellent credit score. Alternatively, it can lead to a debt problem that you will struggle to pay long-term. Save money by following the tips below and learning how to use your credit card correctly.
1. Work with a budget.
Shopping is made easier by a credit card, but you should never use it to buy things you cannot afford. Try the 50/30/20 method: 50% of your take-home pay goes to necessities, 30% goes to savings, and 20% goes to wants.
2. Track your purchases.
Calculate how much you are spending every month and check whether or not you are able to follow your budget. Use your credit card’s mobile app or website to help you. Be disciplined. If you already reached your monthly spending limit, do not use your credit card until you have paid off the balance.
3. Set up automatic payments.
Save yourself the time and energy required to pay your bills individually each month. Add enough funds from your checking account and schedule the payments in advance. Paying on time will also boost your credit score!
4. Never max out your credit card.
Credit utilization, or how much of your credit limit you are using, plays an important role in determining your credit score. If you run up a large balance and carry it from month to month, your score will suffer. For the best results, use as little of your credit limit as possible.
5. Pay your bill in full each month.
Paying the minimum sounds cheaper and more convenient, but it will cost you a ton of money over time. Interest adds and it is a big waste of money. Just pay your balance in full each month to make the most of your cash.
6. Review your statement regularly.
Read your statement in full, with the intention to verify transactions, as well as to catch errors or unauthorized charges.
7. Redeem rewards!
Learn the rewards program of your bank and make sure you enjoy the rewards you receive. Maximize the cashback or points you earn by spending in the categories that earn the most rewards and use them before the expiration date.
8. Enjoy the extra perks.
Credit cards offer other perks like rental car insurance, travel insurance, price protection, extended warranty, and so on. Review your credit card agreement to check the perks you are entitled to and enjoy them!
9. Understand the fees you are paying.
Majority of credit card fees can be dodged, if you are aware of them and how the process works. For example, you can always pay on time and avoid cash advances to skip the late payment fee and cash advance fee.
10. Download the mobile app.
Use your credit card’s mobile app to have easy access to your account. This can also be done through a browser but an app is more secure.