Using a credit card is more than a way to pay for things. It’s an essential part of your financial life, and it can make or break your budget if you’re careless with it.
That’s why we’re here to help.
We’ve gathered the best tips before, during, and after applying for a credit card in this blog post so that you have all the information necessary to get started on building good credit habits from day one.
Secured credit cards will help you to build your credit rating
A secured credit card may help you get your first credit card if you’re starting with no credit at all.
A secured credit card is intended for individuals who lack or have a damaged credit history. A cash deposit is required to open a secured credit card account. Deposits are usually equal to the credit limit.
Singapore’s minimum deposit for secured credit cards is S$10,000. The credit limit is usually about this amount or a bit less. The credit line in most secured cards increases if you deposit more.
Failure to pay on time could mean losing your deposit. The good news is that if you consistently pay on time and keep your spending well below the card’s limit, you might establish good credit in as little as a few months.
Typically, your issuer would then upgrade the account to a regular unsecured card. They can also allow you to apply for a standard credit card and close the secured card.
Seek out the best credit card for you before applying
As mandated by law, credit card issuers display their interest rates, annual fees, foreign transaction fees, and other fees on their websites.
Before you decide which credit card to sign up for, you should use the information provided online. Learn everything you can about each card.
You can find credit cards without annual fees that are a perfect starting point for a regular credit card.
It is important to note that card issuers check the credit score every time you apply for a credit card. This type of inquiry is known as a hard inquiry. These hard credit inquiries can hurt your hard-earned credit score, so it’s a good idea to manage it. Only apply for hard credit inquiries for cards that match your credit criteria.
Establish a budget and follow it
Credit cards can make purchasing more accessible. But you shouldn’t use them to buy things you can’t afford.
It is crucial to have a realistic idea of how much you can spend in a month and how much you can pay off.
Consider using a budget like the 50/30/20 method. You spend 50% on necessities like rent and food and 30% on wants but not needs, and 20% on savings and paying down debt. Stick to your income, spend and save efficiently.
Maintain a record of your purchases
An excellent first step is to figure out how much you can spend. Then, use the app or website that came with your card to track purchases throughout the month.
After you’ve reached your spending limit, don’t use the card until paid off completely. Discipline like this helps build credit and keep debt at bay.
The credit card app or website lets you keep track of your account anytime. You can log in online at any time to access your account details. Check your available credit, make sure your payments have been posted, or report a lost or stolen card.
Keep track of credit card purchases with the credit card’s mobile app. Regularly check your bill. It’s easier to make budgeting fun when you see your spending habits.
Do not go over your available credit limit
It can be tempting to charge as much as you can to your card as possible, but it is crucial not to do so.
It is vital to keep track of how much of your credit limit you are using to determine your personal credit score.
Having an excessive credit card balance and carrying a balance for several months can hurt your score. Besides, it can set the stage for lifelong debt.
Maximize the use of your card
You need to use your card to prove your positive financial habits to legal lender cash mart and credit card companies. Also, keeping it active will keep your card issuer from closing your account.
Maximize your card by using it responsively but keep your credit utilization rate below 30%. Use the credit card to add variety to your credit history. Aside from a personal loan from a legal lender like Lucky Plaza money lender, a credit card is an excellent addition to the mix.
Pay the bill in full each month
While high interest rates on credit cards can be overwhelming, you will not have to pay any interest if you consistently pay the total amount due on time.
Many credit cards offer grace periods. You won’t be charged interest during a grace period as long as the balance is paid by the due date.
The grace period varies from one card issuer to another. Most cards allow a three days grace period. Understand your card’s grace period by checking its terms and conditions.
You shouldn’t feel like you are late if you are a day late, so don’t give up making the repayment.
Paying the minimum repayment is still okay if you can do it within the next few days. But do your best to repay your debt in full to avoid any significant interest fees. Paying just the minimum repayment means you can avoid the late payment penalty, but the interest charge will accumulate.
Pay your bills on time
Not only should you pay the total bill, but you should also make sure to pay on time. The majority of credit card issuers charge a massive late payment penalty. The payment history accounts for 35% of your credit rating. If you consistently miss a payment, your credit history will be at stake.
You can lower your interest rate by paying all of your bills on time and get the credit score rise over time.
To avoid missing your due date, set a reminder for yourself every month. Setting it up in your phone or calendar will make it more likely you won’t miss it. You can also set up automated payments to make sure you don’t miss any fees.
Enjoy the extra perks
Several credit cards offer extra benefits, such as cash back or travel rewards. Check the advantages of each credit card. You can also call your card’s customer service to know more about your perks.
Story by Faith Dayrit
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