How to Make Your Credit Cards Work for You

Many people carry and use credit cards, but they don’t know how to use those cards effectively. In fact, most people use their cards as free or endless cash options. This kind of loose and directionless spending can cause big problems later on.

Credit cards are powerful. They can be used to get ahead financially rather than playing catch up. There are payment and usage strategies you can use to increase your credit and make it pay dividends.

It’s not just about hitting a certain number or being able to make that large purchase. Good credit and a strong understanding of how credit cards work can give you confidence. No longer will you wonder, does not paying your car insurance affect your credit? You’ll know just how your credit score affects your life and how to make the changes to see more positive trends.

Credit 101

The best place to start is with the basics. Credit can be a complex concept. Frequently, people are handed a credit card with little understanding of how the process works or the consequences they may experience.

So, what is credit? It’s the promise between two parties when money is exchanged. One party loans money to another with the expectation that the money will be repaid. The terms and conditions of that loan are based on the trustworthiness of the party receiving the money.

Credit comes in many forms, but it’s most often seen between individuals or one individual and a larger financial institution. Some of the most common types of credit are loans and credit cards.

Some people have a negative view of credit and believe it’s not necessary. However, credit offers flexibility and financial safety. Using credit cards helps protect your money or personal information when shopping online and allows for an emergency or large purchase.

Like most things in life, credit and credit cards come with inherent risks as well as rewards. They can increase spending and put a person further into debt.

Once you’re in debt, those cards can pile on hefty interest and fees, making it even harder to pay off that loan. The best way to negate this risk is to understand how to best use them.

How to Use Credit Cards Effectively

Credit cards are one of the most powerful tools in a consumer’s pocket. Understanding how to make them work for you is just one of many credit score secrets. How these cards are used can determine your long-term credit ranking and opportunities for larger purchases.

#1 – Pay it off Every Month

The best piece of credit card advice is to pay off your balance every month. Don’t leave it for later or even have a few dollars holdover from the previous month. Clear your card completely every month.

Not only will you feel lighter knowing you don’t have a large credit card balance hanging over your head, but it’s also the best way to stay away from large late fees or increasing amounts of interest.

#2 – Monitor Your Account

Before computers and electronic tracking systems, keeping track of how and where you spent your money was difficult. Today, however, online account systems make it easy to check in with yourself financially.

As you use your credit card, make sure you check your online account and electronic statements frequently. This will help you stay on top of your spending and payment due dates as well as notice any suspicious activity.

#3 – Big Purchases and Limits

Credit card usage should be as rigid and strict as possible. That’s why it’s important to know your personal and credit limits. If you are concerned about overspending, ask your credit company to lower your credit limit.

If you do need to make big purchases and saving cash is not an option, consider using your credit card to make the purchase. Then pay off the purchase over a few months using a strict and unflinching repayment schedule.

#4 – Rewards and Perks

Many credit card companies offer rewards and purchase perks. You can often get sign-on bonuses as well as partnerships with other retailers or travel accommodations. The more you use your card, the more rewards you can gain for future purchases.

Credit and Insurance

The best and most effective strategy for credit card usage is to pay it off completely after each purchase or monthly statement. But what about other payments and responsibilities?What happens if you miss a car insurance payment?

The good news is that missing a car insurance payment will not negatively affect your credit score. It can, however, cause your rates and premiums to jump by almost 25%. Some insurance companies offer a grace period after the due date to avoid late fees, but others do not. Make all payments on time to avoid stress. You could also seek out non-credit-based car insurance.

Laura Gunn researches and writes for the auto insurance comparison site, She is passionate about people understanding and harnessing the power of credit to maximize their opportunities.


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