5 things you must know about credit cards

5 things you must know about credit cards

If you have a credit card, that you probably do, these are five things you must know and try to avoid. These tips will probably save you from future headaches. Read on to discover all the details!

There are lots of myths around credit cards, but some of them are true! In this article, we will solve all your doubts and save you from future headaches. Here you will learn about five things you must know and try to avoid. 

Credit cards can be sometimes tricky the key is understanding every single detail about them and don't get distracted. Read on to learn everything about credit cards!

You might have heard that it’s only after you use a new credit card that the account affects your credit score. However, applying for new credit comprises 10 percent of your credit score. It doesn’t matter if you’re approved for the card or if you use it; it’s the inquiry that counts. Frequently applying for new credit can hurt your credit score, so make sure you really need that new card before you apply for it.

If you don’t pay the total minimum payment on your credit card bill, your credit card company may report it as a missed payment. This can bring down your credit score and make it more difficult to qualify for credit in the future. Check your statement for the minimum amount due, and be sure to pay it on time to keep your account current.

Avoid paying the minimum!

Avoid paying the minimum! Paying more than the minimum amount due is a great way to pay down your debt and until you pay it off, interest will continue to be charged each month.

You might accrue interest even after you’ve reduced your balance to zero. This is called residual interest, and it’s due to the gap between the date on which you’re billed and the date you make your payment. To avoid residual interest, call your credit card issuer and request a calculation of the exact amount owed on the date you expect your check to arrive. 

You might accrue interest even after you’ve reduced your balance to zero.

If you manage your credit cards wisely, a high credit limit can be an advantage. Thirty percent of your credit score is based on your debt-to-credit ratio. If you have a high credit limit and you keep your balances low, your debt-to-credit ratio is also low, which can help your credit score.

Finally, credit cards are great tools for building your credit history, and you don’t need to carry an unpaid balance to do so. Your best strategy is to use your credit cards and pay off the bill in full each month, so you keep your overall debt-to-credit limit ratio low.

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