In today’s modern era, credit cards are considered valuable as money itself and not having it may appear to be unthinkable bearing in mind the need for us to take care of our family and pay for our basic needs. Without having a credit card could also reflect a negative point to somebody’s credit score and might upset someone’s credit card request later in life.
People who are first time credit card holders or before now have a credit card for a while now but is not knowledgeable of the positives and the negatives that comes with it, you may want to understand a number of of these guidelines to keep you the inconvenience or rectify any mistakes in connection with credit cards.
Late Payments
Credit card bills paid on time is a big advantage for you and your credit score. If there will be an incident of you not being able to compensate it on time, however, you could appeal to your bank to offer you some kind of consideration and if you have a reputation of making on-time payments, they may permit your request. Making late payments on a regular basis does not only hurt your credit score, it will also cost you more with larger interest rate and penalties.
Missing on your payments
Virtually the equivalent idea as paying late, more interest fees and penalties are added to your bill. For you to have a good credit record, you should prioritize paying your credit card as stated in you agreement. Penaltiesof a missed or late credit card monthly payment include a charge amounting from £10-£25 known as “late fee” charge. Late payments are also reported to the credit bureaus and if you don’t improve this habit it will look bad to your credit record. What’s more, your interest rate will be likely increased to the default rate which is the highest interest rate creditors can bestow you.
Paying your credit card bills on time is one of the most essential things you can do if you’re a credit card holder because 35% of your credit score is based on credit card bills paid on time.
Cash Advance
Getting a cash advance on your credit card should, as much as possible, only be used for emergencies or if you could pay for it before the due date. The reason for this is because once you get the cash from the ATM, interest for that cash will start to roll and there is no grace period whatsoever. If you have an emergency such as buying a critically needed medicine, you could first ask if they would accept to charge the bill to your credit card rather than paying for it in cash that came from a cash advance with the same credit card. The reason for this is because a cash advance will probably cost you more than an actual credit card charge.
Just after points or rewards
If you are someone who is eager to buy things with your credit card just to earn points, think of the broader picture and how it could ruin your resources. If you pay your credit card bills on time, then doing it might be even at your advantage. However, if you don’t have a good track record with your payment, you should get out of this as much as possible and focus on straightening out your obligations.
Maxing out
If your credit card balance is limited and you have a tendency of going more than its limit it can also affect your credit score. Also known as maxing out, this practice could also make you seem someone who does not know how to properly budget and may have an impact to your future credit or loan applications. Maxing out is part of the Credit Utilization criteria which is about 30 percent of the credit score.
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