by Lyle Daly | March 27, 2019
Are you missing some important credit card knowledge?
Credit cards are an area where the average consumer is somewhat ill-informed. There’s all kinds of misinformation about credit cards, and people often take it to heart.
A lack of knowledge regarding credit cards can have real repercussions, as it can affect your credit score and how much value you get every time you make a purchase. That’s why I’m breaking down the things I learned about credit cards too late and why they’re so important.
I’m sure I wasn’t the only one who had a negative impression of credit cards as a young adult. Peers would warn each other about high interest rates and the dangers of credit card debt, and I figured there was no good reason to get a card of my own.
The reality is that a credit card is the most effective way to build your credit score. If you take your time getting a credit card, it will take you longer to improve your credit. That means you’ll probably need to get a cosigner for something as simple as renting an apartment, and you could be stuck paying a deposit to get your utilities set up.
Using a credit card responsibly:
I wised up and got a credit card eventually, and about a year later, I got my first rewards card. I was ecstatic at the prospect of earning points on all my expenses.
However, the card earned a mere 1 point per $1 on all spending, and the redemption options were limited to getting cash back at a value of $0.01 per point or using my points to purchase a product from the card issuer’s rewards shopping portal.
When it comes to credit card rewards, “better than nothing” just isn’t good enough. Had I bothered to research the best credit cards first, I would have found plenty that earned more points per dollar and offered more valuable ways to redeem my points.
In the days when I was less financially responsible, I’d carry a credit card balance from month to month. It was nothing crazy, but I was paying interest for no good reason, and it was all because I got careless with my spending.
I made the typical credit card mistakes. I spent money I didn’t have because I figured I’d earn that money by the time my payment was due. I’d guesstimate how much I could afford instead of using a budget. Surprise, surprise -- my guesstimates always painted an overly optimistic view of my finances.
Credit card interest is too high to carry a balance, and that’s why you should always:
Like many consumers, I assumed that when a credit card company makes a decision, it’s final, and you’re essentially stuck with whatever terms your card issuer gives you.
That couldn’t be further from the truth. In fact, credit card companies are open to negotiation on quite a few things regarding their cards, including:
It’s easy to miss key details of credit card offers, and that can end up being costly. I’ve made this mistake before when I mixed up which of my new credit cards had a 0% APR intro offer, which resulted in paying unnecessary interest. It wasn’t that costly, but I did feel like a dunce for making such a simple mistake.
Whenever you’re taking advantage of a credit card offer, make sure you understand all the rules. Here are a few common examples:
There’s a lot I wish I had learned about credit cards sooner. If any of the tips above are news to you, use my mistakes as a learning experience so you don’t make them, too.
If you have credit card debt, transferring it to this top balance transfer card can allow you to pay 0% interest for a whopping 18 months! That’s one reason our experts rate this card as a top pick to help get control of your debt. It’ll allow you to pay 0% interest on both balance transfers and new purchases until 2022, and you’ll pay no annual fee. Read our full review for free and apply in just 2 minutes.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2021 The Ascent. All rights reserved.