6 Smart Uses of Credit Cards & Ways to Protect Against Credit Card Hacks

In today’s fast-paced world, Everyone wants to get things right now whether they have the financial capabilities of that much or not, Due to this they have started using Credit cards that allow you to give credit for the specified limit which can be paid within the next cycle.

“A credit card is a payment card issued by a financial institution that allows the cardholder to borrow funds to make purchases, with the agreement to repay the borrowed amount along with any applicable interest charges.”

Obviously, Credit cards have given certain flexibility regarding payments. they can get you into serious debt that will have a major adverse impact on your financial life. Although some people shy away from credit cards because they’re afraid they’ll end up too deeply in debt, this isn’t always the best approach.

Here, we have discussed certain smart uses of Credit cards and by following them, We can certainly avoid Credit card hacks and can escape fraud:

1. Always pay the credit card bill on time

If you have multiple credit cards, this means multiple credit card bills at the end of the billing cycle. It can get difficult to keep track of the bills you need to pay and the due date of each card. It is advisable to avoid the late fees on your credit cards by keeping a monthly reminder on your phone or calendar at the due date of each card to pay the bill. There are also several applications on your phone which help you keep track of your credit card bills with the due date for each card.

It is important to pay your credit card bill on time and in full as mentioned earlier. Payment history is the most important factor that affects your credit — and a single late payment could result in a reduction of more than 100 points from a good credit score.

2. Strictly avoid carrying a credit card balance

It is most important to know that carrying a credit balance will never fetch you a better Credit score in any way and it will always affect the score. if you have balances on either of your credit cards, it is strongly advised to clear the credit card bill which has a higher interest first. This will help you save money on interest. You can also choose to close the credit card bill which has a lower balance. This helps you close the card account faster. It is advised to pay the credit card with higher interest, and in full, and not only the minimum amount due.

3. Always avoid closing an old credit card

The well-known credit scoring firm, FICO never recommends closing a credit card account to increase your credit score and suggests that the decision to close an account should be made carefully. Whether to close your credit card account is a decision you must make based on your particular situation. 

By closing the account, you lose access to the credit line, which affects your utilization ratio. And, you shorten the average age of your account history, where having a longer account history is better for your credit score. 

4. Freeze your credit and place a fraud alert

Freezing means that no one will be able to access your credit report without your approval. Creditors likely won’t approve an application without having access to your credit report.

A fraud alert can protect your credit history from unauthorized access for one year, after which it can be renewed. A fraud alert won’t completely lock down your credit reports the way that a credit freeze does.

5. Never use more than 30% of your available credit

It is most commonly said that at any point of time, you should aim to use less than 30% of your available credit, and that is the best rule to follow. But there is no magical utilization rate cutoff for every scoring model.

To maintain your best possible credit score, your credit utilization ratio should be no more than 30% and should ideally be even lower. So, with a credit card that has a $1000 limit, you want to charge no more than $300. If you go over this amount, you can expect your credit card to fall until you have paid off the dues.

6. Try maximizing rewards by using a credit card that matches the spending

The last most important rule of being a smart credit card user is to get as many rewards as you can get. You can do this by choosing a rewards credit card that provides bonus points or cash back in the areas where you spend the most. you may prefer to use a card that provides extra rewards for gas and groceries.

Credit cards will help your finances, rather than hinder your financial progress, and you will be much better off for having used them.

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