If you use a credit card responsibly, it can be a powerful tool that allows you to handle unexpected emergencies or purchase items when needed. If you’re not prepared for how to manage a credit card, you can end up damaging your credit for years to come. So, what’s involved in managing a credit card account?
Choosing a Card
It’s a good idea to compare all options before applying for a credit card. There are many different types of credit cards. You’ll find that some have higher interest rates than others, and some have hidden fees such as an annual fee or a processing fee. Make sure you read the terms and conditions of any card that’s available to you.
Paying Back the Balance
A credit card gives you the ability to present the card as a payment method for a product or service today and pay for it later. Credit card companies give you a grace period that ranges from 20 to 30 days, and if you pay back the entire amount you borrow within that time frame, you won’t owe any interest.
It can be tempting to pay only the minimum amount due each month, which is typically 2 to 5 percent of the total balance. The problem is if you only pay this small percentage of the total amount you owe, it will take quite a while to pay back what you’ve borrowed, and you’ll pay a surprising amount of interest in the meantime.
Paying back the balance in full each month is also a way to keep your credit utilization low. It can be tempting to use your credit card whenever you want something or need to cover an unexpected expense, but if you can’t pay back the full balance each month, it’s important to make a plan on how you’re going to pay it back. Take care of your current balance before making another purchase, or in time you may end up in debt way over your head and unable to make your monthly payments.
Know Where You Stand
Always know where you stand with your credit card account. Signing up for email or text alerts can help you to make sure you always make your payments on time. These alerts can also let you know if there’s any unexpected activity on your account that could mean someone gained access to your personal information.
Your Credit Report
Keeping an eye on your credit report can also help you stay on top of where you stand. Errors on a credit report aren’t uncommon, and misinformation on your credit report can bring down your credit score. Errors to look for include incorrect balances, incorrect payment history, duplicate accounts and accounts you don’t recognize.
If you’re not familiar with the process of disputing errors on your credit report, reach out to Dovly. As an automated credit repair engine, Dovly can do the work of straightening out credit report errors for you, putting you in the best possible position to be approved for credit in the future. Contact Dovly today.