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Well over 60 percent of Americans have access to a credit card. The more interesting fact is how many of these people have more than one. Reports have shown that most of them have as much as 4.
The truth is that the United States does not rank first in the number of people with this card. Countries like the United Kingdom, Canada, Japan, Israel, and even Norway is rated higher in terms of the percentage of these cardholders.
The question is why many people want credit cards given the number of people that are cardholders. The reason is because of the many benefits attached to it. We are going to discuss some of the benefits people appreciate about this card here. Additionally, we will share some tips on how to properly use it.
Benefits of Using Credit Cards
The number of people that apply and use credit cards keeps increasing. More people prefer to use it for payment rather than the debit option. Some of the reasons for this are explained below:
Credit Score Issues
Your credit score can be defined as the evaluation of your financial habit. It is the way the pertinent bureaus have termed you to be creditworthy.
Well, the thing is that you will not be able to access certain things without this score. For instance, you cannot get a mortgage without this score. This is even if it is your first mortgage.
In the same vein, there are other loans and benefits you cannot have access to. Having a credit card and using it properly will help you get a good score.
Reward Programs
Having it exposes you to different kinds of reward programs. This can be cashback, vouchers, points, and several other reward systems. The same does not (usually) apply for holders of the debit option. So, people that want the rewards can go for this option.
Financial Protection against Theft and Loss
There are laws in place to protect holders of this card in the incidence of theft or loss. This is as long as a report is promptly made to the issuer. At most, the maximum that can be lost if this is done is 50 dollars.
Payment Insurance
We strongly advise that cardholders are aware of the terms and conditions attached to using their cards. One of the information should be about insurance on items purchased with the card.
For some options, money can be refunded for items stolen, broken, or lost shortly after they were purchased with the card. However, you need to be certain this is in the terms and conditions.
Tips on How to Use Your Credit Card Properly
An anonymous person once said, “Improper use of credit cards is the easiest and fastest way to become a debtor”. Well, this is the last thing anyone of us wants.
The essence of using it is to make life better rather than getting worried about clearing off a huge debt. This is why you need to understand how to use it the right way. In light of this, below are some tips to help out:
Do Not Have More Cards Than You Need
Many people in the United States and many parts of the world have more than one credit card. The simple question is if it is necessary or ideal for them to have so many.
Well, most of the time it is not. Except you have figured out that you need so many, you should only use one or 2 at most. The reason is because of the annual charges and other expenses that come with using more than one.
Imagine having to pay 400 dollars for every one of your 3 cards as the annual charge. That is well over a thousand dollars that could be used to sort out other things. So, you should only use as many cards as you truly need. Do not go overboard with this.
We have also gathered how some people forget to clear their debts on or before the due date. You are advised to make the most of automatic payment services to avoid this. This is important as there may be no grace period by your issuer.
Pay in Full
This is one of the biggest pieces of advice you will ever get from anyone that understands how this works. Violating this rule will bring up things you are not ready to deal with. The least of your problems will be incurring more debt than you borrowed.
This is because interest will accrue for every month you do not clear your debt. This is something you should make a reasonable effort to avoid.
Pay in full is especially because of the alarming interest rate by most of these issuers. For instance, we have gathered that the least interest rate is about 18 percent.
Even at 18 percent, you do not want to incur more debt. So, save yourself the trouble by paying all your debt before the due time. You should also do this because of the impact on your credit score.
Do Not Bite More than You Can Chew
The last point stressed the need to pay up before the due date. One way to make sure of this is only borrowing what you can pay. So, say “no” to the urge to spend more than you can repay. We strongly suggest that you have a set budget and make sure you do not exceed it.
This would also mean you should not be carried away with reward packages by some issuers. While it is good to take advantage of these opportunities, make sure you are not spending more than is ideal for you.
To do this, you should also pay attention to your spending by using the right tools. Some people end up with more expenses than they planned because of the lack of tools to help them monitor their spending. So, it is not out of place to get mobile apps that help you calculate your purchases correctly.
Do Not Spend More than You Should
There is something called a credit limit. This means the maximum amount you can borrow with your card.
Well, it is strongly advised that you do not come any close to that limit. This means you should not spend as much as your credit limit allows. The major reason is that doing so will negatively affect your credit score.
You should avoid this if you want a good score. We strongly advise that you do not request any more than 30 percent of your credit limit. Playing by this rule will help build a good score.
This can benefit you in several ways. For instance, getting a first and even second mortgage is a lot easier with a good credit score.
Use the Most Relevant Card
Do not just settle for any card. You have to make sure it serves you well. For instance, consider the reward plans offered.
Some offer sign-up bonuses, Cashback for certain purchases, and other forms of loyalty reward programs. Go over what they have to offer and make sure it is good enough for you.
For instance, the annual charges should not be more than the rewards. Speaking of relevant credit cards, you can visit kredittkortinfo.no for more on this subject.
On a Final Note
We have shared some very important tips to help you make proper use of your credit card here. You should know the most important of them all is paying your bills as soon as possible.
This will help you avoid exorbitant interest charges. We strongly advise that you make good use of this information going forward.
