Try this simple, but important, financial homework assignment: before you make another purchase on your credit card, clarify the benefits and obligations outlined in the terms of your card contract.
Here are five details about your credit card that will help you both bolster your credit score and benefit your budget:
- What Can You Do With the Card?: When you’re spending with your card, are you earning any rewards, such as cash back or airline miles? Consider transferring cash rewards into savings to give your financial growth a boost. It is also important to know the limit on your credit card, even though you will ideally be paying off your credit card balance at the end of each month.
- What Are You Paying For?: Find out your APR, or your annual percentage rate. This is how the bank calculates the additional interest you will be charged each month. Look up fees for balance transfers and late payments.
- What Do You Owe Right Now?: If possible, in order to pay down your debt, pay above your card’s minimum payment amount each month. Keep tabs on your current credit card balance. Whether or not you are currently spending on your credit card, it is good financial practice to keep track of your card balance. Doing so will also help you spot credit fraud.
- Know Your Dates: When is your payment due? Late payments negatively affect your credit score and add costly fees! Consider scheduling automatic transfers to prevent forgetfulness.
- Bigger Picture: The above elements contribute to your credit score, which can be a determining factor in future interest rates and obtaining financing for purchases. Also keep in mind that a credit card balance carried from month to month means you’re paying interest on your purchases. That’s money that otherwise could have accelerated your financial progress.
Go online, or call your bank to request information about the terms and conditions of your credit card. Responsible debt management is a vital part of a curated, satisfying financial life. To learn about other ways to improve your financial life, as well as how to start a rewarding second career, visit Syncis at https://www.syncis.com/blog/.