3 things you should know about your credit cards
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Credit cards tend to get a bad rap because they can cause some people to spend too much money and get into debt. But when used responsibly, credit cards are a useful financial tool. Not only can they help you build credit, but they can also put money in your pocket to buy the things you need and want.
If you are going to use credit cards, it is important to understand the details of how they work. Here are some things you need to know about every credit card in your wallet.
1. Your interest rate
You can assume that you will pay off your entire credit card balance each month and avoid accumulating interest charges. But sometimes credit card debt is inevitable, like when emergency expenses hit and you don’t have the money in a savings account to cover your costs.
This is why it is important to know the interest rate that your different cards are charging you. If you know you’ll be charging an expense that may take a few months (or more) to pay off, you’ll want to stick with the card with the lower rate. And if you find that all of your cards charge a lot of interest, you may want to consider requesting a new one.
2. The due date of your payment
Your credit card bills are due once a month, but not necessarily at the end of the month. One of your credit cards may be due on the 10th, while another is due on the 18th.
It is important to keep an eye on your credit card due dates for several reasons. First, you don’t want to be late with a forgettable payment because being late, even once, could damage your credit score. Second, knowing the different maturity dates of your cards could help you better manage your cash flow. If you’re considering a big expense that you need to bill and you get your next paycheck on the 15th, you might want to put it on a card with a due date after the 15th.
Another thing you need to know about credit card maturity dates is that you can call your issuer and request that these dates be adjusted. If you have two credit cards, for example, you may find it helpful to have their payments due on the same date. Or, you might want to plan your due dates to better align with your work payment cycle.
3. Your advantages
It is common for credit cards to offer perks like cash back rewards or rewards on purchases. But you could be entitled to even more benefits than that.
Suppose you have a travel rewards credit card. You can benefit from savings such as free checked baggage and discounted in-flight purchases. You may also be entitled to some degree of protection if things go wrong during your travels. That is why it is important to study the benefits of your credit card. You never know when they might come in handy.
Knowing the ins and outs of how your credit cards work is part of being a smart consumer. Take the time to dig into your maps so you can get the most out of them.
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