Getting the most out of your credit card
When it comes to credit card, the options are endless, and for many of us, barely a month goes by without an offer dropping through the letterbox. From cashback to airmiles, rewards and more, there are plenty of benefits to be gained from spending sensibly on plastic – but if you don’t take the time to consider the options, then you could be missing a trick. Whilst lots of the big banks now offer attractive packages, it’s never wise to jump in head-first without doing your research, and applying for credit card after credit card just to take advantage of offers has the potential to do your credit score more harm than good. And, if you’re not even using the cards you’ve got, then do you really need another?
Although card issuers and other reputable sources do their best to provide helpful advice on using your credit cards more efficiently, this is not always heeded; many holders are guilty of making extravagant purchases on impulse, and it is here that the problems can start. Instead of scanning effectify’s pages in search of the most tempting rewards, and daydreaming about exactly how you’ll use them, it’s wise to make sure clued up and armed to manage your finances sensibly first.
Not sure where to start? Here are top four tips for getting the most out of your credit cards.
Seek out consumer reviews and recommendations from reputable sources, as this is the best way to find out if you’re really getting a good deal. Some offers aren’t quite what they’re cracked up to be, so it always pays to do some digging first. The New York Times has recently published its own suggestions for getting the most out of some reputable credit solutions, which are well worth a read if you’re considering a new card.
Always ask yourself if you really need another card. For example, if you don’t travel that often then a card offering you airmiles may not really be worth having – however great it might sound. Organising a trip you wouldn’t usually go on just so that you can use them will end up costing you far more in the long-run, so only take up offers that will truly benefit you in your day to day life.
Monitor your card usage. Many reward cards have a very specific set of criteria you must meet if you’re to claim the benefits they offer, and if you don’t spend in the required way then you’ll never see them at all. It’s also important not to get carried away with spending just to rack up points; a high percentage of credit utilisation will damage your credit score in the long-run, so try to keep balances low and pay them off each month.
Make sure you know your usage terms. If you don’t, then disappointment at not receiving the benefits you’d hoped for could be the least of your worries, as you could end up with a sky-rocketing interest rate or unwanted charges if you don’t handle your account with care. Be sure to keep an eye on your balance and due date, always pay on time, and take care not to exceed your credit limit.
Once you’ve had an honest look at your finances and credit solutions, you might be surprised to find that the cards you have no longer match your needs – and often, that they never really did. The best way to choose a reward card that is right for you is by analysing your biggest area of day to day spending, and seeking out a card that would compensate you for the expense in some way. If you do travel a lot, then a card that rewards you in airmiles is in fact, an excellent choice – but if your biggest spend is on household bills or groceries, then look for an option that could help you save money there.
If you realise that the accounts you already hold are no longer of benefit, then hold fire before hurrying to close them, as this can result in a plummeting credit score despite the fact that you have settled some debts. Keeping your accounts open and ensuring the balances remain low is the best approach, and handling your accounts responsibly and wisely will ensure that you get the best from them.