Knowing how to use your credit cards in a healthy way can help you work towards building your credit score over time and ensure you’re not revolving larger debt month to month. Below are ten simple ways to make sure you find the right card for you, use it wisely and avoid rookie errors along the way.
Fiona helps match you with the right card by searching on your behalf for personalized results without affecting your credit score.
Get Matched with the Right Card for You
Different cards have different benefits. Which one you pick depends on your personal needs and how you expect to use it. Some credit cards are great for building credit, while others offer exclusive benefits and perks. Make sure you know what your intentions are when applying. Once you know your intentions, use Fiona to get matched with the card that works best for those intentions.
Search Pre-Qualified Credit Card Offers
Once you know what you are looking for, make sure you are likely to qualify. Traditionally, the key to this was checking to see if your credit rating was high enough to satisfy the lender. The trouble was, this would take a hit on your score as you applied. Nowadays, you can use Fiona to get pre-qualified for credit card offers without a hard pull, leaving your credit score untouched.
Make Regular Payments
Paying something back is better than paying nothing at all. Keeping up to date with payments is key for two reasons: paying less interest over time and improving your credit score. If you have an outstanding balance, this will mean paying interest. But if you pay back even just part of it, your score is less likely to be negatively affected. Every little bit counts!
Don’t Forget About Rate Changes
Many credit card providers entice consumers by offering a low introductory interest rate. If you accept a credit card with a special introductory interest rate, it’s important to remember when that rate changes. It couldn’t hurt to put that date in your calendar, so you can aim to chip away at your revolving balance before the interest rate becomes less favorable.
Transfer Your Balance
If you see a better deal, take it. You can save money by making a balance transfer from a high interest to a low interest account. Sometimes there are no fees to make the transfer, and even when there are, you still stand to save by paying less on the money you owe.
By searching for personalized, pre-qualified credit cards offers from top providers, Fiona can save you time and money.
Don’t Spend Above Your 30% Limit
One of the keys to keeping a good score is to stay well below your credit limit. No more than 30% is ideal. So, if you have a credit limit of $1,000, then keeping your spending below $300 is the goal. That way, lenders know you are more likely to be able to pay it back, increasing their trust in you.
Don’t Close Your Account
It can be tempting to close an account if you are no longer getting use out of it. But, the trouble is, at a distance this can look like a red flag. A closed account can read as a relationship gone wrong. If you can, keep your accounts open as this will signal to future lenders that you are committed for the long run.
Don’t Let Fees Put You Off
No one likes fees. But sometimes it serves to put long term gains over short term saves. In the end, annual fees and signup costs can be annoying, but the amount you save in having a lower interest rate will often make up the difference in fees, plus some.
Don’t Apply to Multiple Cards At Once
Applying to multiple cards at once has a similar effect to closing accounts. You want to show lenders that you know what you’re doing, that you choose wisely and stick to your guns. If you close accounts or if you apply to too many at once, it looks scattered and sketchy. Know thyself (and your credit score).
Don’t Be Put Off If You Have Bad Credit
A common misunderstanding is that you need good credit to get a credit card. Not true. Someone does: but it doesn’t need to be you. If you have, for example, a willing partner with good credit, ask them to add you as an authorized user to their card. Use this as a launchpad to build your own credit back up. Alternatively, get a secured card. This puts a cap on your borrowing attached to an initial deposit, securing the loan. There are options: use them!
Details make a difference, but hopefully this cheat sheet will help you get a sense of the key things to do and not to do when it comes to credit cards. At the end of it all, choosing a credit card is a personal decision with lots of points to consider. Thankfully, that is why services like Fiona are useful, since they do the hunting for you. Why not try it out?
As Fiona only soft-pulls basic personal information, your score remains unaffected whilst still providing you with credit card options tailored to you.