Having a credit card is both a good and a bad thing. It is a great tool to have in the event of an emergency or when a necessary purchase comes up and you don’t have the funds in your bank account to make that purchase.
But it can be a looming specter. If you are irresponsible with your spending, your credit card balances can grow into very real debt that hinders you throughout your life. Knowing how to be as responsible as possible with these tools is the key to using them properly.
Max out Your Rewards Where Possible
Most credit cards will have what is called a “rewards mall”. This means that they offer cash back as a percent on every dollar that you spend, extra frequent flyer miles, or more points to use towards gift cards or other rewards.
Taking advantage of these when you online shop is something that you should definitely take advantage of. If you were going to do these things anyway – meaning you are not incurring additional expenses just to get these rewards – it is a slam-dunk, no-brainer to get as many rewards back for that shopping that you were going to do anyway.
In addition to building your credit, you can get money back or cool items just for using the card in a way that you had already planned on.
Switching Your Payment Date Can Help You Avoid Late Payments
It is important, maybe most important, that you not make late payments or miss one entirely when you have a credit card. Making on-time bill payments comprises 35% of your FICO credit score and can have a huge impact if you fall behind regularly.
If your credit card bill comes at an inconvenient time of the month, consider changing the due date online or calling your issuer. This could help you find a more convenient time of the month and help you keep your credit in good standing by avoiding a missed payment or two.
Mid-Cycle Payments Could Help Your Credit Score
This sounds crazy but each month, your card issuer will send a report of your account to the three major credit bureaus. This entails your credit utilization ratio, important to your credit score. But the data doesn’t necessarily get sent over after you’ve made your payment. The fact is that it could be reported at any point in your cycle.
That’s why paying mid-cycle can help keep your credit utilization low, which helps 30% of your credit score since it’s determined by amounts owed.