The best way to use a credit card is to pay off the balance each month. This will prevent you from incurring interest or late fees. If you can’t afford the money to pay off the balance then set up a payment plan with the lender to avoid paying interest. Usage of a credit card should not be used as a means of operating your budget – instead, it should be utilized as an emergency fund in case.
1. Save money by avoiding ATM fees
One of the most common mistakes is using your credit card for cash withdrawals. The majority of debit cards have a 3% transaction fee on ATM withdrawals. And, that’s if you don’t have an account with a bank that has no ATM fees. So, by avoiding these fees you can save money.
A second mistake people make is withdrawing too much money at once which can lead to incurring overdraft fees. By withdrawing funds in increments of $50-100, you can avoid this problem.
See Also: What Is Credit Card Abuse And How To Prevent It?
2. Save money by transferring balances
With a credit card, individuals can transfer balances from one card to another and save money.
Using a credit card for balance transfers is better than using a personal loan to do the same thing. With a credit card, there are no interest or monthly fees associated with it. Interest rates on personal loans are higher and they usually carry late fees as well. Credit cards also provide some protection against paying expensive late fees on other bills such as student loans, car payments, mortgages, and utilities.
3. Find the best credit card for you
Shopping for credit cards can be a daunting task, but with the right information, it can be easier.
One key to finding the best credit card is to pay attention to the annual percentage rate or APR. The APR is an important factor because it determines how much you will spend in interest over time.
The APR is the interest rate that a lender charges for an entire year on a loan of a given size and term. One way to find out what your potential APR will be before you apply for a card is by checking your credit score which you can do through various sites or by speaking with one of their representatives.
4. Beware of hidden credit card fees
Credit card frauds are on the rise, and while using credit cards is easy, the hidden charges while using them can be costly.
There are two ways in which one can incur hidden charges while using credit cards. The first one is when the customer unknowingly signs up for an annual fee. The second way in which you could be charged is when you get out of your grace period after paying your minimum balance.
To avoid these hidden charges, it is essential to keep track of all your transactions and know when your annual fee will expire. You should also take care to ensure that you do not overspend on the card so that you don’t incur these penalties for getting out of your grace period.