Credit cards are powerful financial tools that, when used wisely, can enhance your financial well-being. However, misusing them can lead to a cycle of debt and financial stress. This article will guide you on how to use credit cards wisely and provide information on how to apply for one.

Credit Card Usage

Credit cards are not just a means of borrowing; they can help build your credit, provide rewards, and offer purchase protections. The key to benefiting from credit cards is to use them responsibly and understand the terms and conditions that apply.

How to Apply for a Credit Card

• Determine the Right Type of Credit Card

Before applying, decide what type of card you need. If you're looking to earn rewards, choose a card that offers the highest earnings rate on the purchases you make most frequently. For instance, some cards offer bonus rewards for groceries or travel expenses.

• Preapproval Process

To minimize the impact on your credit score, look for issuers that offer an online preapproval process. This helps you gauge your chances of approval without a hard inquiry on your credit file.

• Fill Out the Application

Once you've chosen your card, fill out an application on the issuer’s website. Provide necessary personal and financial information. You'll usually receive a response quickly.

Tips for Using Credit Cards Wisely

• Build Credit Responsibly

One of the biggest benefits of having a credit card is the ability to establish and build your credit score over time. Using your card responsibly by paying at least the minimum due every month and preferably the full balance will demonstrate positive payment behavior to the credit bureaus. Keep your credit utilization below 30%, avoid late payments, and monitor your credit report regularly to ensure no errors or fraudulent activity, and you’ll be well on your way to strong credit.

• Earn Rewards and Bonuses

From cash back to airline miles, the rewards and bonuses offered by credit cards can add up quickly, saving you hundreds of dollars every year on your frequent purchases. Be sure to pick a card with a rewards structure that matches your spending categories, like groceries or gas. Pay off balances monthly so rewards aren’t negated by interest charges. Also understand qualifying purchases and redemption values so you can truly maximize special seasonal bonus offers.

• Avoid Interest Charges

Carrying a balance on your credit card means you’ll pay interest on those purchases until they’re paid off. Rates generally range from 14% - 25% APR. Set calendar reminders for your billing cycle end date and payment due date so you never miss a payment within the grace period. Pay in full each month and you’ll avoid finance charges altogether while still getting the convenience and benefits of using your card.

• Utilize Card Perks and Protections

In addition to rewards programs, credit cards offer an array of perks from rental car insurance to extended warranty coverage. Especially for large purchases, paying with the right card can get you extra protections. As an example, some cards with return protection will let you make eligible purchases for 90 days against returns being denied. Know the special features of cards you use frequently so you can save significantly.

• Change Billing Dates

If your current credit card billing cycle doesn’t align well with when you receive your income, call the issuer to request a change. Most allow you to shift statement closing date and payment due date anywhere from a couple days up to over thirty days depending on the company. Just keep the new date in mind so you don’t miss payments.

• Set Up Alerts

Taking advantage of account alerts offered through your credit card provider’s online system or mobile app lets you monitor activity and catch problems early. Typical alerts may notify you of charges over a certain dollar amount, transactions made internationally, payment due reminders and more. Activating alerts only takes a few minutes and gives great peace of mind.

• Avoid Cash Advances

While credit cards do allow you to take out cash advances quickly in a pinch, it comes at a very high cost through fees and interest rates above 25% in most cases. Cash advances don’t qualify for lower introductory rates either. Withdrawing cash should only be a last resort. You’ll save a lot by using your card strictly for purchases only.

• Pay for Group Costs

When you shop in groups or dine out with friends, offer to put the total bill on your card if possible to rack up even more rewards points in one shot. Just be sure you have enough funds or credit available to pay that balance off in full when your statement comes, since higher short-term balances can negatively impact credit scores until paid down.

Conclusion

Credit cards, when used judiciously, can be a boon to your financial health. They offer a convenient way to manage finances, build credit, and enjoy rewards. By understanding how to apply for and use credit cards wisely, you can leverage their benefits while avoiding common pitfalls. Remember, the key to successful credit card use is responsible management and an understanding of the terms and conditions of your credit account.