Credit cards can be very helpful when acquiring, building, and/or managing wealth. Still, if you’re not careful, they can have the opposite effect.
Follow these tips to avoid spending a lot on fees and interest while boosting your credit score:
5. Read the fine print on rewards cards. Credit card providers typically charge higher APRs and fees to compensate for the cash back and other rewards.
- The best strategy for using a credit card with rewards is to make enough purchases to qualify for the rewards, but then pay off your balance in full every month to avoid paying interest.
6. Keep it simple. Owning too many credit cards can make managing your accounts difficult. You’ll be more likely to miss a payment.
7. Be careful with balance transfers. This can sound like a good option if you qualify for a credit card with lower fees and APR.
However, most credit card companies will charge you a transfer fee, which is usually a percentage of the debt you are transferring. Paying 3% of the amount you’re transferring to get a slightly lower APR might not save you money.
8. Avoid cash advances on your credit cards. A cash advance can be a tempting option because this cash is very easy to get, but you’ll have to pay a fee and will have to make larger monthly payments to compensate for this charge. Cash advances often have a higher rate of interest as well.
These tips will help you stay on the right track with your credit cards. Keep in mind that you can easily avoid fees and spend less on interest by being responsible and planning your expenses and payments in advance.
***Shop around for a better credit card every two years or so. You will qualify for better products as your credit score improves from following these strategies.