Having a credit card is not a bad thing now. On the contrary, getting approval from the bank for such a thing can be a joyful event. The main thing is to use it in the right direction. After all, often, customers do not control their costs and fall into a debt trap.
If used irresponsibly, you can get into debt much faster than you might expect. Therefore, let’s look at what is the best way to use a credit card if you are new to using them or want to improve your existing credit.
Pay your Bills on Time
Paying your bills on time is an important aspect of taking control of your financial life. But it is not always possible to calculate the money for payday. In this case, it makes sense to use a credit card. In the US, payment history is one of the essential factors in how your FICO credit score is determined.
Paying bills on time ensures that you continue to build a positive payment history. In addition, timely payment of credit card bills ensures that there are no late fees, which can be as high as $35. Taking control of your bills can help you balance your checking account.
Pay More than the Minimum
Controlling the status of your card is an essential factor in being on credit. If you don’t want to get into debt, you should learn how to manage your finances. The smaller the balance on your card every month, the less interest you will have to pay later on loan.
The best way to avoid costly interest payments is to pay the balance in full each month. If the full payment of your account is simply not possible, then the best way out of the situation is to put as much money on your balance as possible.
You should realize that the more you invest in the outstanding balance, the less interest you will have to pay in the long term.
Monitor your Credit Card
Don’t forget to keep an eye on your credit card. We advise you to check your account several times a day. In the age of digitalization, deceiving people is easy.
You may not notice how money was debited from your account for a subscription that was not cancelled, how you overdue the payment and began to accrue new loan interest, or how a fraudulent organization deducted a large or several small sums of money from you for a dubious purchase.
In the end, your bank account can simply be stolen. Therefore, you need to get into such a useful habit – monitoring your credit card.
For fraudulent charges
Fraudsters do not sleep and are activated at any opportunity. Their fraudulent activities can lead to a rapid increase in the amount of debt in your credit account. By constantly monitoring the activity on your cards, you will be able to identify fraudulent transactions faster.
Today, many banking apps offer alerts if suspicious activity is detected on your account. If you notice one of them, call the bank immediately and block the account. And do not leave your card details on suspicious sites.
For new credit inquiries
There are two types of credit inquiries: hard inquiries and soft inquiries. When a lender or company requests a review of your credit report as part of the loan application process, that request is recorded on your credit report as a hard inquiry.
Such requests may remain on your credit report for up to two years, although they usually only affect your credit scores for one year. A soft inquiry occurs when you check your own credit or when a credit card promotional offer is generated. These requests do not affect your good credit score.
For dormant account activity
You must initiate some activity on our accounts every few months. A bank account that is not used for a long period (about 12 months) becomes dormant to reduce the risk of fraud.
If financial institutions are unable to contact you, your account will be terminated. The longer the account is inactive, the higher the annual maintenance fee will be.
You can keep your account active by deposits, money transfers, withdrawals, or even by logging into your account at least once every six months. Check transactions, cash withdrawals, overseas billing, and cash deposits can also help in this case.
For making payments on time
From time to time, you might want to delay a payment for a few days, especially when you’re low on cash and have a bunch of other bills to pay. And even the consequences won’t change your mind. But it is better to think about the benefits of timely payment.
You will be able to do unique collection checks. Even the smallest credit card balance can be sent to them if not paid within a few months.
Also, credit card issuers may increase your interest rate if you are more than 60 days past due. The default interest rate on many cards is a staggering 30%. It is better to avoid this and deposit money on time.
Don’t Forget about Purchase Protection
Purchase protection is one of the benefits of a credit card. The capabilities of this feature may vary by company. Differences may affect the time within which credit card users must file claims, the duration of coverage for their purchase, and claim limits.
Credit card purchase protection usually covers theft and damage to a tangible item for a certain period of time from the time the item was purchased. Damage coverage contains physical damage to the appropriate item.
This feature also extends to stealing any related goods. You only need to provide supporting documentation along with the claim form. Lost items and purchases are not usually covered by the purchase protection program.
What is purchase protection?
Purchase protection allows consumers to sue their issuer to receive a replacement, repair, or refund for any eligible stolen or damaged items. If you’re planning to spend a lot of money on furniture, electronics, or other large purchases, this coverage can help you save money. In general, purchase protection claims can be submitted online or over the phone on all major credit card networks.
Credit card purchase protection applies to purchases you make with that card within a certain period of time. This allows you to receive a refund for an item or receive a replacement if your purchase is damaged or stolen, usually within 90-120 days.
But this feature is never provided in unlimited quantities. You will have a limit on the number of applications, as well as an annual or lifetime limit in your plan. Certain types of purchases are also excluded from purchase protection coverage.
How does purchase protection work?
You can get not only coverage for your purchases with a credit card, but you can use that coverage if you paid for the item with rewards previously earned. Purchase protection can repair, replace, or refund you for eligible items in the event of theft or damage.
Once you pay for an item with a credit card, reward points, or a combination of both, that item is automatically covered by the insurance. If your item was damaged or stolen during the active purchase protection period, you will need to file a claim by calling the hotline or filling out an online form. Within a few days, your claim will be reviewed, and you will be reimbursed.
Best Credit Cards Offering Purchase Protection
If you’re one of those consumers who do not know what protection is available for eligible items purchased with their credit cards, then you should take a closer look at these services. Earlier, we looked at the advantage of such cards and coverage. Now we want to invite you to get acquainted with three bank cards, their functionality, capabilities, add-ons, what purchases, and for what amounts they protect.
Chase Freedom Flex
Chase is the only banking institution that offers purchase protection on all their credit cards — regardless if it’s Visa or Mastercard. Meanwhile, some card issuers don’t offer purchase protection at all. With this card, it is possible to pay for a purchase in whole or in part with your card or Ultimate Rewards points earned in your account.
Chase covers stolen or damaged goods for 120 days up to $10,000 per claim. Also, it is possible to have $500 per claim in the first 3 months from account opening and $50,000 per account with Chase Freedom Flex. It is worth noting the 3% commission for foreign transactions in US dollars as the disadvantage of this credit card.
Ink Business Cash Credit Card
If you are a business owner, you are likely to be very busy and would probably prefer a credit card that will make your work and spending easier. With this credit card, you will receive 1.5% cashback on all purchases. Ink Business Cash Credit has no annual fees and offers flexible rewards to its customers.
Also, you can earn $750 bonus cash back after you spend $7,500 on purchases in the first 3 months from account opening.
Ink Business Cash Credit has an excellent fraud protection system for your card transactions. The bank will monitor for possible signs of fraudulent activity using real-time monitoring. But, as Chase Freedom Flex, this card has a 3% commission for foreign transactions in US dollars.
Chase Sapphire Preferred
It is one of the elite premium travel credit cards. With it, you can earn 3x more travel and meal points and get the best luxury benefits. So, you’ll get top-notch travel protection, whether you are at home or on the road.
Chase Sapphire Reserve Card gives 60,000 points as welcome offers. Annual fee of $550. Coverage is offered for up to 120 days from the date of purchase for theft and damage.
The protection applies to purchases with a limit of $10,000 per application and $50,000 per year. This card earns Ultimate Rewards at the rate of 3 points per dollar spent on travel and meals. All other purchases are worth 1 point per $1.
To qualify for this credit card, you must have a good credit score of 740-850.
Transfer Debt to Your Card with 0% APR
Transferring a high-interest balance to a credit card with a starting rate of 0% can save you hundreds or even thousands of dollars in interest. You can use this money in the future to get rid of debt as soon as possible.
The best balance transfer cards do not charge an annual fee. And they offer an initial period of 18 months or more and at 0% on transfers, or 15 months or more, also at 0%. Some of the best credit cards can be applied for through NerdWallet.
What is 0% APR?
A 0% APR means you pay no interest on certain transactions for a certain period of time. When it comes to credit cards, 0% APR is like the rate you can get when you open a new account. Such a percentage offer does not last forever.
It is limited in time, but still lasts at least six months and sometimes longer. After this period, if you have a card balance, you will begin to see the standard card rate applied to the balance. In general, this offer is similar to the possibility of deferring the interest rate.
How do 0% APR Credit Cards Work?
An annual interest rate of 0% may be applied to the annual interest rate for a card purchase or a balance transfer, or both. It depends on the offer. For example, if your card offers this rate for both eligible purchases and balance transfers. You will not have to pay interest during the promotion period.
When using a deferred interest offer, as opposed to a promotional offer with a zero interest rate, interest is charged, but it is deferred until the specified end date of the offer. This means that when the deferred interest offer ends, your standard interest rate will apply.
Best 0% APR Work Credit Cards
Credit cards typically charge higher interest rates than many other financial products. But 0 % APR credit card with an introductory purchase offer can help you temporarily avoid additional costs and potentially save hundreds of dollars.
Below, we highlight a few of the best APR zero interest credit cards. But be aware that some cards may lack features such as rewards and other perks that may force you to use the card after the promo period ends.
Citi Simplicity® Card
Citi Simplicity Card offers a very long initial APR offer for balance transfers, with a per-transfer limit of 5% commission (or a minimum of $5). This card has neither a rewards program nor a welcome bonus, so it’s really “simple” for those who want to keep their balance for a long period of time.
With this card, you will not have late fees, penalties, or annual fees. But late payments will still affect your credit. You, as a customer, will have up to 21 months to repay balance transfers with no APR (16.24 percent to 26.24 percent thereafter). And with the program Citi Quick Lock, you can stay protected and have $0 liability for unauthorized payments.
Wells Fargo Reflect℠ Card
Wells Fargo Active Cash offers an unlimited 2% cash reward rate on purchases and no annual fees. The card has one of the longest 0% APR periods for both purchases and qualifying balance transfers from account opening up to 21 months, followed by variable APRs from 14.49 to 26.49 percent.
In addition to the potential low current APR, mobile phone protection, and basic Visa travel benefits, the Reflect card also offers other special extras as long as you always make at least the minimum payments on time.
About the protection of a mobile phone should be noted separately. The credit card offers up to $600 in theft or damage protection when you use your card to pay your mobile phone bills each month (up to $1,200 per year for two potential claims minus a $25 deductible).
Citi® Diamond Preferred® Card
The Citi card is designed for a long initial APR period with zero interest. As with the previous one, Diamond Preferred offers 0% initial annual income for 21 months on balance transfers and 12 months on purchases.
The variable annual interest rate is 15.24%-25.24%. The card returns 5% cashback on quarterly category changes on purchases up to $1,500.
Citi Diamond Preferred allows you to choose your preferred monthly payment date. This can give you some flexibility when you have problems with salary or personal budgeting. However, the card is non-rewarding, so you have little incentive to use it once you’ve paid off your balance.
Useful tip: Use All Possible Bonuses
Make sure you know how to use a credit card to the full extent. It can be used not only to close loans but to save money and even receive nice bonuses. They come in all shapes and sizes. They give you cash back, points or miles that you can redeem for credits, travel, gift cards and more.
But if you, for example, replenish the balance, you can cancel all the rewards received. We provide below some of the features that will be useful to you if you want to save money with your credit card.
Some cards may offer you good cashback value. For example, the Citi Double Cash art offers 2% cash back on all your purchases. But most often, it is 0.5-1% offered by most bonus cards with a fixed cashback rate.
Most frequently, customers get a point for 1 cent. On average, you can earn a convertible point from 0.90 cents for hotel bookings or 1.57 cents for airline flight bookings.
Cashback can take many forms. The real cashback goes straight to your bank account, made up of the cash you earn with your credit card. Statement credit is not a direct cash deposit, but it reduces the amount you owe in the account, allowing you to save money. Gift cards are redeemed against the cashback you earn at various restaurants and retail stores.
Some credit cards offer their customers to earn points for trips, flights, purchases, and other activities. For example, points can be converted into vacation money if a certain amount is missing.
In some cases, you may need to close the card right away without worrying about the best redemption value because you need to use the points, otherwise you will lose them. Generally, you can only transfer or combine rewards with cards of the same issuer and between cards of the same type.
If you want to travel to exotic destinations several times a year, fly first class for miles and pay for hotel stays with points, then you should set up your credit card correctly. Many miles cost about one cent apiece, but their value still varies.
Also, each airline sets its own requirements. It is impossible to bring everything to the same denominator. But, in any case, you need to register an account on the company’s website and open access to your card. Each time you fly, you enter your individual flight number into your booking to earn miles per flight.
Using a credit card, you can not only postpone spending from your personal wallet but also save and even receive bonuses in points and cash equivalents. In our article, we tried to briefly introduce you to the best credit cards from American banks, so that you can not only choose a specific one for yourself, but also tell your friends and acquaintances how to use credit cards for the benefit of your budget.
Understanding of using a credit card in the right way gives you many benefits: you pay your bills on time, get extra money, avoid scams, and travel to the most beautiful places on the planet. You not only begin to approach your spending wisely but stop balancing on the verge of falling into a debt hole. We hope you have become more disposed to this type of financial instrument.