Friday, April 19, 2024

6 Credit Card Tips for Building a Good Credit Score

6 Credit Card Tips for Building a Good Credit Score

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Credit Cards:  Unlock financial flexibility with your plastic currency! Learn how to maximize credit card uses to maintain a good credit standing.

While credit cards serve as a convenient payment method for purchases, they offer additional functionalities that can benefit you financially. Furthermore, there are proactive steps you can take to maintain a favorable credit profile when using these instruments judiciously.

credit cards

Defer payments with 0% interest

Rather than paying cash or thru a debit card,  you can choose to delay your payments using credit cards without incurring any interest charges.

Certain credit cards also provide flexible payment options through installment plans, such as Balance Conversion, Balance Transfer, and the popular 0% Installment scheme.

These arrangements allow you to spread out the payments over a period of time, potentially making it easier to manage your finances.

Earn perks and rewards

Credit cards often provide additional benefits beyond just the ability to make purchases on credit. These supplementary advantages can take various forms, such as reward points that can be redeemed for merchandise, travel miles, cash rebates, gift cards, complimentary items, or access to exclusive lounges and facilities.

The specific perks on offer tend to vary from one card issuer to another. To learn about the rewards associated with your particular credit card, you can inquire directly with the card provider or explore the details outlined on their website.

Build credit history

Utilizing a credit card in a prudent and responsible manner can serve as an effective means of building a favorable credit profile. By demonstrating a consistent pattern of making payments as agreed upon, you signal to financial institutions that you are a reliable borrower who honors their obligations.

This positive credit history can enhance your creditworthiness, increasing the likelihood that lenders will view you as a low-risk candidate for future loans and financing opportunities.

Ask for additional credit limit

If you have a good credit standing, you may ask your card issuer to increase your credit limit. This will give you more flexibility, especially for big-ticket items.

Never divulge your card’s One-time Password (OTP)

It spares you from fraud.  You should never give your OTP to any person for purchases or transactions that you did not make personally.  Should you find yourself a victim of credit card fraud, you can contest any unauthorized transactions on your credit card statement.

Pay the amount due for the month, not just the minimum

Paying the entire amount reflected on your credit card statement is ideal.  However, you may pay the minimum amount due, but it will only apply to the interest charges for the month and not on the principal.

Any unpaid balance that carries over to the next billing cycle will continue accruing interest charges. This cycle of accumulating interest or worst, penalties can cause your debt to escalate rapidly over time if left unchecked and may hurt your credit standing.

The negative record will have an adverse impact on your credit profile, potentially making it more challenging to obtain new credit cards or loans from other lenders in the future.

Understand how credit card works

Getting a credit card is  not necessarily synonymous  to going into debt. By understanding the mechanisms behind credit card debt, you can effectively control and strategize your monthly expenditures and repayments.

This knowledge empowers you to navigate the use of credit cards responsibly, potentially preventing the accrual of outstanding balances altogether,