If you stay on top of your credit you may not need plain green loans in order to get extra money when you need it. The truth is, the better credit you have, the more you can take advantage of the best interest rates on the market and it will save you money in the long run. Instead of taking part in the mistakes you can make with your credit, there are plenty of ways that you can adapt to make good sound credit decisions that will follow with you throughout the rest of your life, while never worrying about being approved for a loan or getting charged too high of interest rate, wasting away your hard-earned money out the window.
A Late Payment Adds Up
While sure, even a day late will not be reported to the credit bureaus, but that doesn’t mean there won’t be consequences for your actions. If you become thirty days late it will be reported to the bureaus and will have a huge impact on your credit score, but what about that period of being past the due date but not thirty days late? Well a late fee is definitely in order, but beyond that, your interest rate could spike, costing you far more money over time then a late fee. In order to stay on your payments, scheduling your payments in advance is a good way, on or before the due date.
Whether you are paying too much for your cable bill, looking for a new car, or shopping for a home, you never take the full asking price without trying to negotiate. Will same goes for credit terms, and on a credit card, what matters most that you pay on is the interest rate. If you think you are paying too much, try threatening to take your business elsewhere if they cannot lower your rate. You may not get down to the percent that you have in mind, but no doubt it will at least be lower than the sky-high APR you have today.
Strive for the Best Rewards
While you should strive to pay the full statement balance by the due date so you don’t have to worry about how much interest you have, the next priority should be the rewards. By making the normal purchases you would be making anyways, you can earn points to redeem for gift cards, hotel rooms, or airline miles, not to mention cashback rewards, which is even more nice. Keep in mind that if you continue to charge to earn rewards and go over what you can afford to pay back, any rewards earned will be washed by interest you will now be paying.
Don’t Get Used to the Promo Rates
Sometimes a balance transfer can make sense where you can transfer high interest debt over to a new card or consolidation loan at a lower interest rate, and with another credit card, it may come at a promo rate of, say, 0% APR for a year to pay back, but once that time expires, it will be hit at a sky-high rate. While a balance transfer can make sense if you can pay off during that time, there will likely be a transfer fee as well, usually around 3-5% of the transfer balance, but that will be a lot less than what you would pay on the existing high interest card.
Minimum Payments Don’t Help Anything
If you carry over a balance to the next month you will now be hit with interest, but there will be a minimum payment that you need to make in order to keep your account in good standing. Paying this minimum will satisfy your account for the month but paying only that minimum will do little to your balance, so if you do happen to carryover, continuing to make the largest payments you can afford until the balance is gone is your best bet, instead of wasting money on interest.
Credit Cards Actually Aren’t Bad
I suppose there could be a negative connotation when it comes to credit cards due to the hole one can get themselves into by going on a spending spree, but as long as you can use and pay responsibly, using credit cards can actually make good financial sense. Besides building credit and the rewards, they can help protect your bank account during fraud, replacing a debit card with a credit card, so that if any fraudulent activities are found, they will be held up on your credit card instead of wiping out your account.