Use Your Credit Card – Don’t Abuse It!
July 8, 2007 – 8:25 am
What’s in your wallet? Which credit card are you using? Why did you select that particular card from among the daily flood of offers that you receive in the mail? How do you use your card? Some people use credit cards strictly for big-ticket items, while others may use them for all their everyday purchases; some may carry a balance while others pay it off every month. Even though people use credit in different ways, one fact remains the same: good credit card management is important to everyone. If you make a mistake that puts a black mark on your credit history, it can cost you dearly in higher borrowing rates or even impact your ability to borrow at all.
The following tips can help you manage one of the most critical aspect of your life – your finances:
1. Develop a consistent payment routine.
Years ago, it was possible to tackle household bills on a certain day each month but today’s billing cycles rarely match up, which can mean several different due dates throughout the month.
People can more easily manage their monthly credit card payments by choosing a card that enables them to set their own payment due date based upon what works best. I just asked Capital One for a mid-month bill cycle when I applied for the card and they were happy to accommodate my request.
Developing a consistent payment routine can really pay off – sometimes even literally. The Discover Motiva Card provides cardmembers who make on-time monthly payments six times in a row their next month’s interest back — twice a year, every year when they pay on-time each month.
2. Pick a convenient time and way to pay your bill.
Checkbooks may not quite be a thing of the past but writing checks is definitely not the most convenient way to handle your bills. In today’s wired world, there are more payment options than ever making it easier and faster to pay bills. As a result of bank consolidations, I have had an opportunity to use three different on-line banking systems and Wachovia bank is the hands down leader in ease of use. As soon as Wachovia returned to our area, I moved my accounts back with them – primarily due to their on-line banking and bill payment system. They have a sample system on their website that you can take for a test drive so check them out.
Do your homework on what options are available and pick the method that’s most convenient to your lifestyle or when you get paid each month. For example, some credit card companies allow cardholders to set up automatic direct payments online or by phone for recurring monthly bills. Others allow cardholders to schedule their payments in advance to align with their pay periods or let them pay their bill for free by phone or online — even on the payment due date. I am not a big fan of using automatic withdraws for bill payment. There is just something about giving a bunch of companies automatic access to my bank account that doesn’t feel right.
3. Use account management tools to save time and money.
Many credit card companies offer account customization tools that enable cardholders to keep close tabs on their account and budget. To avoid fees, some companies allow cardholders to set up reminders to let them know that their payment due date is approaching, or if they’re close to exceeding their credit limit. E-mail reminders can also be set to alert them when a large purchase has been made or help track when a return, credit or balance transfer is posted. In addition, cardholders are able to access their account summary information online to help them track spending, create a budget, and sort transactions by date, amount, description or category which can be helpful for tax preparation.
4. Use your credit card rewards to help pay down your balance or reduce expenses
Some credit card companies allow you to redeem cash rewards in the form of a statement credit, which helps you pay down your balance faster, or you can have the money deposited directly to your bank account. You also can save some money by taking advantage of other redemption options such as the ability to double your rewards when redeeming for places where you already shop. However, you choose to manage your account, pay the entire balance when the statement comes in. If you can’t afford to pay off your card right away, make paying it off your top priority!
If you would like more tips on good credit management and other information, visit www.discovercard.com.
Portions of this article are courtesy of ARAcontent