People always tell you that you need to pay your credit card bills on time and in full to avoid late fees. After all, you can actually be charged a late fee mere minutes after your payment is due. However, most of us know this already.
But there are other ways to keep yourself financially stable – and even earn a few dollars in the process. In order to help you stay financially healthy, here are three specific credit card tips that will probably surprise you.
Don’t Forget to Collect Cash When You Spend
Just like small businesses select credit card processing companies, you have to pick your credit card carefully. Simply put, you need a card that suits your personal needs. For instance, if you charge in a ton of different places, you should consider getting a standard cash-back credit card.
Although some people are not aware of it, these cards can even put some money back in your pockets. Some pay you up to 3% on everything you charge, others offer around 5% on some spending categories. So if you spend 10,000 dollars on groceries yearly, like most families do, you’re looking at 300 dollars.
Paying just the Minimum is Definitely Not a Good Idea
Paying the minimum is better nothing, however, it can also keep you in debt for a long time. What’s more, paying the minimum will probably significantly increase the interest revenue for your credit company. If you still don’t understand just how important this is, here’s an example that will illustrate our point.
If you own 10,000 dollars on your card and you’re being charged a 25% interest. In this case, your minimum payment is 3% of your overall balance and you’ll have to pay 300 dollars a month. If you don’t make all of those payments, it will take around 15 years to pay the company off, and your payments will amount to more than 30,000 dollars.
Avoid Cards that Feature the Penalty APR
Like we said before, picking the right credit company is crucial and you should avoid cards that feature the penalty APR. Being late with just one payment will increase your interest rate up to 35%. Yes – just one single payment.
Furthermore, if your card already has the penalty APR, you should close it out as soon as possible. Just imagine – you already owe 20,000 on your card and you’re unable to pay the debt off. Before you know it, you’ll be 25,000 dollars in debt, unable to pay it off and trapped in credit hell.
The Bottom Line
Last but not least, if you’re carrying a lot of debt, don’t feel too bad about it – you’re certainly not alone on this. Keep in mind that in the past, millions of people managed to pay off thousands and thousands of dollars in debt. Most of them went on to live financially healthy lives after paying off their debts, which means, you can do it too.