Author: Geoffrey Brown
Your new $5,000 credit card has finally arrived! But before you spend it all, you should consider a few practices that will help you maintain it.
This article will show what you need to do to maintain your credit card and credit score.
Understand the Terms and Fees
Your new credit card comes with terms and fees. Understanding them will prevent any confusion and problems in the future. First, we advise you to check your credit limit; which is the maximum balance allowed for your credit card.
Next is credit utilization. Credit utilization is the amount you have used out of your existing credit. This is crucial in getting a good or bad credit score. Financial experts advise that your credit utilization should fall below 30%.
For instance, If $10,000 is the limit on your credit card, and your current balance is $5,000, then your credit utilization is 50%.
A new credit card will usually come in a Schumer box. This contains essential information like terms, rates, and fees that the credit card issuer charges.
Below are some information and details you will discover.
- Annual fee
- Purchase APR
- Grace Period
- Minimum Payment
- Late payment fee
- Returned payment fee
- Penalty APR
- Balance transfer APR
- Cash advance fee
- Cash advance APR
- Foreign transaction fees
- Additional card/authorized user fees
Keep your Card Safe
You must always protect your card from loss or theft. Ensure to keep your card details confidential, or you may risk compromising your account.
Also, store your credit card documentation because you may need it for account verification in the future.
Take Advantage of Rewards
Your new credit card may offer a reward program. Some credit card rewards offer points or cashback on certain purchases like food, gas, and transportation. You can participate to enjoy the freebies.
Get Online Banking
Signing up for online banking will make managing your credit card account faster and easier. Receiving credit card statements in the mail is a security risk that can be prevented with online banking.
Consider Setting Up Autopay
Your payment history can significantly impacts your credit score. Missing even a single payment can affect your credit score negatively.
To avoid late payments, you may set up autopay on your card. But ensure there is enough money in your bank account to service the feature.
Check Your Credit Score Periodically
Monitoring your credit score will show you the impact of your credit card usage. It will also show you other factors that may negatively affect your score and how you can correct them.
Do Not Overspend
Carrying a higher balance than you can afford from month to month will cause you to pay more interest. Also, your inability to pay your entire balance is a sign that you may be spending too much with your credit card. To stay on budget, ensure don’t overspend.
Conclusion
The way you use a credit card can positively or negatively affect your credit score. To keep your credit score safe, ensure you follow the practices discussed above such as paying your bill on time and having a low credit utilization.