When utilized properly and cautiously, a credit card can be a very important and useful financial weapon in your armoury. However, you risk financially harming yourself if you make a mistake (which we all do occasionally).
Not having solid credit card practices in place may transform this instrument into one that causes more harm than good, from a ruined credit score to uncomfortable interest and penalties. Continue reading to learn what credit card habits you should include in your daily routine to gain the maximum benefits from your credit card while avoiding any drawbacks.
In this blog, we have listed some healthy credit card habits that should be a part of your routine.
Healthy Credit Card Habits That Should Be a Part of Your Routine
1. Make timely payments
First and foremost, one of the most critical credit card habits you can cultivate is paying your credit card balance on time every month. Missing a payment can lower your credit score and force you to pay interest and late fees.
Your payment history is quite essential when it comes to your credit score. Payment history, for example, accounts for 35% of your overall credit score and is the most important contributing component in FICO credit ratings, implying that late payments may harm your score. On the other hand, making frequent on-time payments will significantly help you boost your credit score.
2. Pay Off Your Credit Card As Soon As Possible After Making a Large Purchase
If you make a large purchase, now is an excellent time to pay off your credit card amount instead of waiting for your end-of-month statement. Credit usage (the percentage of available credit you use) accounts for 30% of your FICO credit score. Ideally, your credit usage rate should be less than 30%.
If you make a large purchase that sends you over the 30% threshold, paying it off immediately away can help maintain your credit score solid. Earning cardholder benefits is smart if you can afford to pay off significant purchases immediately.
3. Carefully Review Your Statement Each Month
Every month, when you receive your monthly credit card statement, it is critical that you sit down and thoroughly analyze it. It is an excellent opportunity to validate that you made all the charges you are paying and that no fraud happened. This assessment may also be used to examine your spending patterns and budget.
You can also devise a strategy to keep your balance if you need to carry one. Your statement will show how much you owe when payments are due, the implications of late payments, and how much interest and fees you will have to pay. It will also show how long it will take to pay off your debt if you make the payments.
Final Verdict
Once you understand the best credit card practices, you can develop healthy habits that will allow you to make the most of your cards without incurring unnecessary fees or interest. Using a cashback website like the Great Canadian Rebates can help you save money on purchases and allow customers to maintain good credit. Contact us for more details.