Credit cards can be tricky but useful when yielded correctly. They can often get one in a financial jam ia misused but they can also help raise your credit score when used strategically. Here are a few tips to help you choose the best credit card for you – and use it wisely:
Check your credit report before applying for a card. Read your credit report for account inquiries, delinquencies, and your credit to debt ratio. These are all factors that can affect a bank’s decision on approving you for a card. Too many inquries and delinquencies tell a bank that you might not be responsible with handling debt. A credit to debt ratio that is too high is a sign that you live outside your means and spend more than you make. However, establishing more credit can also lower your credit to debt ratio. Also, check your credit score, as it is taken into account as well.
Do your research. Visit bank websites and read what they have to offer with their cards. Look closely for the APR or Annual Percentage Rate because this will tell you how much interest will be calculated on any balance you carry. Look for annual fees since many cards carry them, some as much as $450 a year! Look for rewards and point systems. Many cards will give you a percentage of cash back as you spend or point/rewards towards future purchases. But be careful – rewards can tempt you to use your card more. Don’t be fooled and spend more than you can afford! This will only benefit the creditor and mess up your credit, making it difficult for you to establish more in the future.
Read consumer reviews. No information is better than first-hand experience. Visit websites like Daily Markets and Credit Karma to read reviews about credit card strengths and weaknesses. You can also visit forums on sites like Credit Karma and read people’s praises and complaints about their cards.
Don’t apply for credit at the same bank more than once in a month. If you do, chances are that second application won’t get approved but the inquiry will show up on your credit report. After approvals, wait at least six months before applying for more credit or requesting that current limits to be increased.
Be safe. Many credit card companies now offer account protection, such as not holding you responsible for unauthorized charges. Some also charge a small fee to suspend payments in case of job loss or some other unfortunate life event. Take advantage of these offers to keep your credit in good condition and protect yourself.