What You Need To Know About Credit Cards

Having a credit card nowadays has turn into a must for a lot of individuals and not having one may seem to be unthinkable in view of the need for us to take care of our family and pay for our prime needs.  Without having a credit card could also display a negative point to our credit score even though they have not had a credit card all their life. 

For individuals who have obtained their first credit card or already have a credit card for a while now but is not aware of how they use it, you may want to read a few of the things you need to know about plastic money to keep you the inconvenience or rectify any mistakes in connection with credit cards.

Being late on paying your bill

On time payments is a huge bonus for you and your credit score.  If ever you won’t be able to pay it on schedule, however, you could appeal to your bank to offer you some form of consideration and if you are someone who consistently pay your credit card bills on time, you may surely get it.  Late payments of credit card bills that occur on a regular basis does not only hurt your credit score, it will also make you pay heftier penalties and interest rates.

Missed payments

Akin to paying late of credit card bills, more interest fees and penalties are added to your tab.  If you would like a decent record on your credit score, you should prioritize paying your credit card as stated in you agreement.  Consequencesof a missed or late credit card monthly payment include a £10 to £25 late fee charge.  Credit agencies are reported by your late payments and if you don’t improve this habit it will greatly affect your credit record.  Furthermore, your interest rate is increased to the default rate which is the highest interest rate you could be paying soonafter. 

On time habitual credit card payment is one of the most essential things you can do for someone holding a credit card as 35% of your credit score is based on on time payments. 

Cash Advance

Getting a cash advance on your credit card should, as much as possible, only be used for emergencies or if you could pay for it before the due date.  The reason for this is because once you get the money from the machine, interest for that money will start to pile-up and there is no grace period whatsoever. If you have an emergency such as getting your pet to a veterinarian, you could first ask if they could charge it to your credit card rather than paying them cash that came from a cash advance transaction.  Why so?  Because making a cash advance will likely cost you more than an actual credit card charge.

Charging only for rewards

As you keep charging your purchases to your credit card, think of the broader picture and how it could possibly affect your resources.  If you pay your credit card bills on time, then doing it might be even at your advantage.  Still, if you don’t have a good track record with your payment, you should avoid this as much as possible and focus on settling your debts first.

Maxing out

If you regularly max out your credit card, it can also cause your credit score.  Also acknowledged as maxing out, this routine could also make you look like someone who does not know how to properly budget and may have an impact to your future credit or loan applications.  Maxing out is part of the Credit Utilization criteria which makes up 30% of the overall credit score.