What You Need To Know About Credit Cards

Having a credit card in this day and age has become a must for a lot of individuals and not having it may appear to be unthinkable considering the need for us to provide for our family and pay for our prime needs.  Not having a credit card could also reflect a negative point to our credit score despite the fact that they have not had one all their life. 

For persons who have obtained their first credit card or already have a credit card for a while now but is not knowledgeable of how they use it, you may want to understand some of the things you need to know about plastic money to keep you the hassle or correct any mistakes in connection with credit cards.

Being late on paying your bill

On time payments is a huge advantage for you and your credit score.  If ever you won’t be able to compensate it on time, however, you could ask your bank to provide you some kind of consideration and chances are they may hold out your dues or even relinquish any fees.  Making late payments on a usual basis does not only hurt your credit score, it will also make you pay heavier penalties and interest rates.

Missing on your payments

Just like delayed payments, more interest fees and penalties are added to your bill.  If you yearn for a decent track record on your credit score, you should prioritize paying your credit card as stated in you agreement.  Consequencesof a missed or late credit card monthly payment include a charge amounting from £10-£25 known as “late fee” charge.  Credit agencies are given notice by your late payments and if you don’t improve this pattern it will reflect badly to your credit history.  What’s more, your interest rate will be likely augmented to the default rate which is the maximum interest rate you could be paying soonafter. 

On time payment is one of the most essential things you can do with your financial reputation because 35% of your credit score is based on credit card bills paid on time. 

Cash Advance

Getting a cash advance on your credit card should, as much as possible, only be used during emergencies or if you will be able to pay for it immediately.  The reason for this is because once you withdraw the money from the ATM, interest for that cash will start to roll and there is no grace period whatsoever. If you have an urgent situation such as getting your loved one to a hospital, you could first ask if they accept credit card rather than paying them cash that came from a cash advance with the same credit card.  Why so?  Because making a cash advance will probably cost you more than an actual credit card charge.

Earning Points

If you are somebody who is eager to buy things with your credit card just to earn points, think of the broader picture and how it could possibly affect your finances.  If you pay your credit card bills on time, then doing it might be even at your advantage.  However, if you are frequently behind with your credit card payments, you should get around this as much as possible and focus on straightening out your obligations.

Maxing out

Reaching and going over the maximum limit on your credit card can also affect your credit score.  Also recognized as maxing out, this practice could also have potential consequences to your financial state and may influence your future credit or loan requests.  Maxing out is part of the Credit Utilization criteria which is 30% of your credit score.

Filed Under: Mag iPhone Authors