How To Best Utilize Your Credit Card

Credit cards can be a source of stress for some people who are constantly swimming in debt and racking up fees, but if you can consistently pay your bills on time and not run into debt, then your credit card is a valuable tool that you will be glad that you have. You can earn points, get cash back, and build credit for future use if you are able to keep your finances in order. To get a credit card with solid rewards, it is expected that your credit score is above 690. Some of these cards have rewards for travel expenses, some for various daily expenses, and some put the money right back into your pocket. You’ll get different amounts of points for different types of purchases, and these range depending on your card, but certain purchases can net you 5% back, which is a deal you don’t want to miss out on. You can also score signup bonuses and get periods of time with no interest. These are all ways to cut down on your personal expenditures, making your credit card, too often a source of stress for people, a valuable personal finance tool. Of course, in order for this to work out then you must stay on top of your payments and not spend more than you’re capable of paying off, otherwise you can accrue some expensive interest fees.

Another thing to remember is that if you are in debt, you should pay it off as fast as you can. Part of that is about avoiding fees, but it is also about building credit. Credit history and utilization both play a major role in how your credit score is determined, so you do not want to stop using the cards that you have. If you close an account that has a high limit, or if the issuer closes your account because you haven’t used it, then you lose the card’s history along with some of its credit. You want to have a good credit mix, which means more than one kind of credit account, such as mortgages or car loans in addition to having credit cards.