Smart Ways To Use Credit Cards: How To Be a Savvy Consumer

Credit cards can help you improve your financial situation long-term and affect your ability to get financial support like a mortgage or car loan in the future.

If you’re reading this, chances are you have a credit card and use it responsibly. For many people, their first credit card is also their first taste of how the world sees responsible adult consumers. Unfortunately, that isn’t always in a positive light. There are plenty of negative media reports regarding irresponsible credit card use and its consequences. And for a good reason!

The last thing anyone needs is another financial burden or something that can be easily misused or mishandled. However, there are many ways to make your credit card work for you instead of against you. In fact, using a credit card wisely can have a number of benefits when it comes to your personal finances and everyday life. From expanding your buying power to getting cashback rewards and more, here are some smart ways to use your credit card responsibly:

Apply for a card with excellent benefits and perks

This might seem a little backward, but you should pick the right credit card before you actually start using it. Before you even apply, research what types of rewards cards are out there and which ones will best suit your needs. If you travel a lot, look for a card with travel benefits. If you have a specific store you’re buying a lot from, see if they have any associated credit card deals. If you don’t have a credit card yet, this is a great reason to go get one. You might not be able to get the same benefits with a debit card. Plus, you can start establishing a credit history that will make borrowing money much easier in the future.

Make all your purchases in advance

Even if you have a card with unlimited spending power and no pay-off schedule, try to get in the habit of paying off your balance in full at the end of every billing cycle. This way, you’re not only paying your credit card bill on time—you’re also avoiding credit card interest payments. If you have a smaller card with a lower credit limit, paying off your balance in full every month is a good way to build your credit score and show lenders you’re responsible. Credit card companies also love to see consistent and predictable payment behavior, so it’s a great way to show them you deserve a bigger limit in the future.

Paying Off Your Balance

Just because you pay off your balance every month doesn’t mean there are no consequences. Unfortunately, your credit score will be negatively impacted if you’re not carrying a balance. This is due to the fact that your payment history is the most weighted factor in calculating your score. However, there are many ways to have a positive impact on this part of your credit score. If you’re paying off a credit card, you can minimize the damage to your score by making sure to pay your bill on time. You can also try to pay more than the minimum required payment each month.

Travel Protection Plan

Credit cards often come with travel-related benefits. Some cards will give you travel protection on your purchases, like insurance coverage in case your bags get lost or stolen. Other cards will give you access to either a free or discounted airport lounge where you can enjoy some luxury while you wait for your flight. Given that airports are high-risk areas for identity theft, you might also want to use a travel wallet or cardholder to keep your information safer. This can also come in handy if you’re traveling abroad, as it can help prevent you from accidentally using a card that has a foreign transaction fee.

Receiving cashback Rewards

Some credit cards offer cashback rewards that you can get just for using your card. Some cards offer a percentage of your purchases back as cash, while others may offer a set dollar amount for every dollar you spend. Whichever type of card you choose, you can get the benefit of using your card to earn cashback rewards. What are the best cashback cards?

You may be wondering which credit card offers the best cashback. Credit card offerings often change, so you may want to stay on top of the latest offers to find a card that suits your spending habits. You can usually choose to have this amount added to your account or be sent as a check in the mail. Some rewards cards even offer travel-related benefits like free flight upgrades or priority boarding. And unlike budgeting for monthly savings, you might not even realize you’re writing this monthly expense off on your taxes.

Use As A Back-Up Emergency Fund

Credit cards are really only one type of debt, but using them is a smart way to handle unexpected expenses like car repairs or medical bills. Credit cards generally have a pretty low interest rate and can be paid off quickly if you’re disciplined about paying off your balance in full each month. If you want to put your credit cards to work as an emergency fund, you can set up an automatic payment that takes a certain amount from each of your credit cards at the beginning of each month.

Even if you aren’t making charges on those cards, you will have a small amount of emergency savings every month. Make sure that you have enough to cover all of your minimum payments if you decide to do this.

Shopping Protection

Credit card shopping protection programs generally cover you if you buy something with your card and it ends up not working out. You may have to work with the retailer to get a refund, but this can be a lifesaver if you buy something that ends up not working like you expected. Credit cards are also a helpful way to prevent price gouging. If there’s a natural disaster in your area, you can use your credit card to buy necessities like food, gas, or diapers without having to worry about fluctuating prices. This way, you can avoid getting ripped off by people taking advantage of the crisis.

Protecting Your Identity and Credit Rating

Credit cards help to keep your information safe. They’ll ask you to provide your full name, address, and other information when you apply for a card. This is a useful way to make sure that only people who are authorized to have this information can get it. If someone gets ahold of your information and tries to use it to steal from you, your credit card company will be aware of it almost immediately. 

They’ll freeze your account so that no one can use it to steal your money. And if someone steals your identity and manages to get a credit card in your name, it’ll appear on your credit report and affect your credit score. Having a credit card will help this look less harmful on your credit report.

Conclusion

Credit cards can be an incredibly helpful tool as long as you use them responsibly and understand the repercussions if you don’t. Credit cards can provide you with a cash advance if you have an emergency, help you earn rewards for everyday purchases, and help you build your credit score. Credit cards can also help you keep your identity safe, which is important because they can affect your financial situation long-term and even affect your ability to get a mortgage or car loan in the future. Visit Clubmoney.com for more information about how to acquire and best utilize credit cards.