How to use a credit card properly


Tips from the Federal Reserve Board (For using a credit card the right way)

No matter how good your travel rewards card is or what features it has, if you do not use it properly you will never reap the benefits of cash back or free travel.

Here are some tips for using your credit card properly:

1) Pay on time

It cannot be said enough, if you maintain a credit card balance, no matter what your APR is, you are making the banks richer and negating whatever travel rewards that your card may be earnng.

Missing a payment causes late fees and will hurt your credit, possibly causing your interest to increase. If your due date falls on a day during the month that is inconvenient for you, most credit card companies will let you change the payment date to better click with your payday.

2) Stay below your credit limit

If you go over your credit limit your card may charge a fee and increase your interest rates to a higher penalty rate.

3) Avoid unnecessary fees

Credit card companies not only charge late payment and over-the-limit fees, but also fees for cash advances, transferring balances, and having a payment returned.Some companies charge a fee when you pay your bill by phone. Pay attention to the transactions that trigger these fees. If you need a cash advance, withdraw enough so that you don’t have to take a second cash advance and incur a second fee later in the month.

4) Pay more than the minimum

If you can’t pay your balance in full each month, try to pay as much of the total as you can. Over time, you’ll pay less in interest charges—money that you will be able to spend on other things, and you’ll pay off your balance sooner.

5) Watch for changes in the terms of your account

Credit card banks sometimes change the terms and conditions of your account. They are required to contact you, be sure to read the new contract rather than just discarding it, the new information may cause you to want to use your card differently than before.

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