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Make Your Credit Cards Work Smarter

Are you under a financial burden? With the array of facilities like credit cards and charge cards available today, it's simple and easy to find a way out. These facilities can ease your tension if you have the right card. 

Equally important before selecting an appropriate card is to ask yourself if you have good or bad credit? Do you pay balances in full or part payment? Do you travel a lot and use specific brands or select apparel from designer stores? Answers to these simple questions lend valuable insight into the right type of card to suit your needs.

1. What's Your Spending Profile?

It is important to realize your spending pattern. Analyze the results. Identify your spending style to match the habits with your card features. If you do not have good credit, avoid a secured card that requires collateral.

Watch your spending pattern

Different credit cards offer more cashback or rewards. This depends on what store you shop at, or what kind of purchases you make. Such as recurring bill payments, groceries, gas, or restaurants. Analyze your spending pattern and payment habits before selecting a card. Start by accessing your bank or credit card statements for the past year.

  • Figure out what you spend most on.
  • Group into a cost category.
  • List optional expenses.

2. Match Credit Cards With Your Goals

It doesn’t matter how you approach or use the assessment. Maximizing your credit cards comes down to how it best serves your end goal. Choose a credit card that fits both your spending and financial goals.

Rewards, ravel points, or cash back?

What category do you spend the most money on? This will determine what credit card would best fit your spending profile. Do you travel every year? Look at whether you want a reward travel point or cashback on purchases.

If you take a vacation every year, choose a travel reward credit card. If you want to save money, choose a cash-back credit card that can help boost your savings account. Be sure that the cashback credit goes directly to your savings account to avoid spending it.

3. Check Payments On Credit Cards

You can download your financial debts straight from bank or credit card companies. Do you pay by cash, credit card, charge card, or through your debit card? Also, check whether you cleared the amount partially or fully. If you want to pay your balances in full or avoid paying interest, a credit card without any annual fee would be the best option, as compared to other cards.

You could also consider a charge card or prepaid card to dodge the financial charges. On the other hand, if you carry forward a monthly balance. Then a credit card with a low introductory or fixed APR would be an ideal bet.

4. Compare Credit Cards

There are various online calculators you can use to compare credit cards. For the most part, you can input your income and spending to get a selection of different credit cards that are right for you. Be sure to look at such things as annual fees, interest rates, interest-free periods, rewards options, etc.

Do the math

If your card has an annual fee, calculate the expected reward over the course of the year minus annual fees. It might still be worth it if the rewards are higher. With this in mind, look at both the interest charged and annual fees as the overall cost of using the credit card.

Conversely, some cards have no interest charges for 12 months but higher annual fees and other charges in small print. Compare these numbers and see which option works best for your goals.

5. Use Credit Cards Wisely

There is a right and wrong way to use credit cards. The right way is to make it work for you. For one thing, you will be saving and not pilling on revolving debt.

Pay in full every month

Most credit cards charge a 20%-fee on balances. As a result, it's important to avoid having a balance on your credit cards so interest doesn't accrue. No reward earned is higher than the 20% on balances carried over.

Spend, spend and spend

The way to get the most out of your credit cards is to actually use them. Maximize the spending on your credit card to get the most out of your rewards, points, and cashback. As much as possible, make all payments on your credit card. Automate bill payments, purchases, groceries, gas, shopping, etc.

If you're using a travel rewards credit card, make sure you actually take a trip with it. In addition, there may be other perks such as baggage loss insurance, access to airport lounges, etc.

Final Thoughts

Sometimes you might just have to change the way you use your card or opt for a better one to suit your requirements. The most viable option is to select a card to suit your present life style.

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