Wise Use of Credit Card and How to Increase Credit Score

man handing over credit card for payment

Some people are hesitant to apply for a credit card because the idea of having too many things to pay for every month can be overwhelming. However, if you know how to use it wisely, a credit card can help your lifestyle.

Things to Remember if You’re Getting a Credit Card

We want to make sure that you know how to use your credit card wisely. If you plan to apply for a credit card anytime soon, make sure that you always keep the following things in mind.

Be Picky

Applying for a credit card is one of those few moments where you get to be picky. Do not just settle for the first one that offers you service. Instead, visit a few banks and inquire about their credit card packages. You’ll find out that they have different reward systems and other benefits. Determine which bank has the best offer and get a card from them.

The Best Credit Card Isn’t for Beginners

Although you should be picky, you also need to remember that the best credit card won’t be given to you if this is your first time applying for it. There are plenty of rewards and benefits that come with a high credit score, and you won’t get them yet if you’ve just started building your credit record. That’s why you must be mindful of your credit card usage.

Secured or Unsecured Credit Card

There two major types of credit cards; secured and unsecured. A secured credit card is the best option for those who have little to no credit history. You’d most likely be approved for a secured credit card as long as you provide a security deposit. On the other hand, an unsecured credit card would be better for those who already have high credit scores because they wouldn’t be required to pay a deposit.

Pay Attention to the Interest Rate

Before you pay for an installment plan using your credit card, make sure you pay attention to the interest rate. Some interest rates go up really high, and you don’t want lots of your money going nowhere. Try to compute how much the total interest would be, and decide if it’s worth paying for.

Swipe if You Can Pay

Don’t think of your credit card as an extension of your wallet. You are borrowing money, and you don’t want to owe someone too much for unnecessary things. If you’re ever going to use your credit card, you first need to think about whether or not you can actually pay for it. If you’re doubtful, it’s probably best not to use your credit card on a purchase at all.

Be Mindful of Your Credit Score

One common mistake people make when using their credit cards is to assume that their behavior is not recorded and will not affect anything else. However, poor usage of credit cards will result in a bad credit score, which can significantly affect other loans you may want to apply for in the future. For example, a good credit score will make it easier for you to apply for homeowners’ insurance.

Increasing Your Credit Score Using a Secured Credit Card

When you ask a lender for a loan or an installment plan, they’re going to need to look at your credit score. Lenders need this to determine how likely it is that they’re going to be repaid. That’s why you must know how to increase your credit score.

Pay Bills on Time

The first and arguably the most important thing you need to take note of when using your credit card is your payment. Paying bills on time can significantly increase your credit score. This includes loans, utilities, and even rent.

credit card payment shopping

Transfer Other Payments to Credit Card

To further maximize the importance of the first method of increasing your credit score, you may want to transfer small payments to your credit card. For example, your utility and phone bills transferred to credit card payments will help increase your credit score if you pay them regularly and on time.

Be Mindful of Your Loans

Whenever you use your credit card to apply for a loan, you need to determine whether you need it or not. When you have too many loans or bills to pay on your account, you will less likely be approved when you apply for a new one, which can be a problem if you need to pay for something important.

While having and using a credit card may always be a subject of debate, especially among those who have just begun their careers, understanding how to use it properly and the importance of credit score helps build your future.

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