Credit cards help manage your finances and build your credit history. It may also offer fraud and purchase protection. We believe that a credit card is only as useful as its user is smart. That’s why we’ve come up with four smart ways to use a credit card that will help improve your financial health.
Use Your Card to Build Credit
If you want to improve your credit, a credit card is a good way to do it. There are two types of credit cards that can improve your credit. A secured card is the more stringent option and requires a deposit (usually refundable) that can be used as collateral. An unsecured card doesn’t have collateral. Your creditworthiness is used to qualify for one. Both cards document payment history to the three major consumer credit bureaus. When you make your payments on time, and regularly, it automatically boosts your credit score.
Use Your Card to Earn Rewards
If you already have a history of making certain purchases (such as airline tickets), you can use your credit card to receive cash back and rewards. This allows you to save on purchases you would be making anyway. Make sure that you are comfortable with the annual fees built into a rewards card because your rewards should ideally offset this fee.
Pay Down Debt
You can strategically pay down debt with a credit card by taking advantage of balance transfer offers during an introductory period. These transfer offers often have low or no interest, so if you pay down your high-interest debt before the promotional offer ends, you will save money on interest charges. If you use your credit card to pay down debt, then you shouldn’t use it for any purchases since doing this will accrue more debt!
Use Your Card to Finance a Purchase
If you get a card with an introductory 0% Annual Percentage Rate for purchases, you can use your card to make a big purchase. However, you should be confident about paying the balance before the introductory period ends, or you might end up with more interest.
