The Best Way to Use Your Credit Card Accounts

When used wisely, credit card accounts have the potential to offer you some very appealing perks. They can help you to build better credit. They offer extensive fraud protections. Many even boast attractive rewards or cash back features. Take the time to learn the best practices when it comes to credit card management and learn how to tap into a lot of great benefits without the downside.

1. Pay Your Balance In Full Every Month

There is a lot of debate regarding the best way to pay your credit card accounts each month. Should you revolve a small balance? Is it best to charge a large amount and pay it down slowly in order to establish a steady payment history? If you search online for credit card management tips you will unfortunately encounter a lot of different opinions and some really bad advice.

It’s actually very simple. If you want to earn great credit scores and save money then the best way to manage your credit card accounts is to pay off your balances in full every single month. Credit scoring models like FICO and VantageScore were created to reward consumers who minimize their balances and now VantageScore rewards you for not revolving card balances from one month to the next.

Credit cards are great tools which you can use to build better credit scores. If you develop a consistent habit of charging only what you can afford to pay off fully each month then your credit scores will almost certainly benefit, and you’ll never have to worry about your interest rates.

2. Pay Before the Statement Closing Date

Always paying your credit card balances off in full is a good habit, but this habit alone is not enough to earn great credit scores. When you pay your credit card bills is also important. For this reason, you should make your monthly credit card payments prior to the statement closing dates.

The account balances that appear on your credit reports are not reflected in real time. Instead, your credit card issuer will report a snapshot of your credit balance to the credit bureaus just once a month. It is important to have a $0 balance on your account on the day your balance is reported.

To achieve this goal you will need to find out the statement closing date on your account from your card issuer. Each month you should pay off your balance in full, or as low as possible, a few days prior to this date. Do so and not only will you save money on interest fees but you should be in great shape from a credit score perspective as well.

3. Pay Attention to Your Statements

Extensive fraud protections are among the best benefits your credit card accounts have to offer. Yet for these fraud protections to work effectively you must be proactive. Just like you need to check your credit reports for mistakes you should also routinely check your credit card statements for any unrecognized charges.

If you discover suspicious charges be sure to notify your credit card issuer immediately. The same is true if you ever lose your credit card or if your card is ever stolen. Fail to report unauthorized charges in a timely fashion and those extensive fraud protections might disappear.

Nervous about Using Credit Cards Again?

If you have ever abused credit cards in the past it is understandable why you might feel reluctant about using credit cards again in the future. However, if you decide to avoid credit cards altogether you could be missing out on a powerful tool.

Even if you have made mistakes in the past it is never too late to start over. Remember, credit cards themselves do not have the ability to hurt you financially or destroy your credit. It is how you choose to manage your credit card accounts which determines whether these little pieces of plastic are a help or a hindrance to your financial goals.