Credit cards tend to get a bad rap, as they can lead some people to overspend and land in debt. But when used responsibly, credit cards are a useful financial tool. Not only can they help you build credit, but they can also put cash in your pocket for buying the things you need and want.
If you’re going to use credit cards, it’s important to understand the details of how yours work. Here are a few things you should know about every credit card in your wallet.
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1. Your interest rate
You might assume that you’ll pay your credit card balance in full each month and avoid racking up interest charges. But sometimes, credit card debt is unavoidable, such as when emergency expenses strike and you don’t have the money in a savings account to cover your costs.
That’s why it’s important to know what interest rate your various cards charge you. If you know you’ll be charging an expense that may take a few months (or longer) to pay off, you’ll want to stick to the card with the lowest rate. And if you find that all of your cards charge a lot of interest, you may want to look at applying for a new one.
2. Your payment due date
Your credit card bills are due once a month — but not necessarily at the end of the month. It may be the case that one of your credit cards is due on the 10th, while another is due on the 18th.
It’s important to keep tabs on your credit card due dates for a couple of reasons. First, you don’t want to be late with a payment out of sheer forgetfulness, because being late even once could damage your credit score. Secondly, knowing your cards’ different due dates could help you better manage your cash flow. If you’re looking at a big expense you need to charge and you get your next paycheck on the 15th, you may want to put it on a card with a due date after the 15th.
Another thing you should know about credit card due dates is that you can call your issuer and ask for those dates to be adjusted. If you have two credit cards, for example, you may find that it’s helpful to have their payments due on the same date. Or, you may want to time your due dates to better align with your payment cycle at work.
3. Your benefits
It’s common for credit cards to offer perks like cash back or rewards on purchases. But you may be entitled to even more benefits than that.
Say you have a travel rewards credit card. You may be eligible for savings like free checked bags and discounted in-flight purchases. You may also be entitled to a degree of protection if things go wrong in the course of your travels. That’s why it’s important to study your credit card benefits. You never know when they might come in handy.
Knowing the ins and outs of how your credit cards work is part of being an educated consumer. Take the time to dig into your cards so you’re able to make the most of them.