22 Ways to Master Your Credit Cards

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Credit cards are a critical part of our financial lives and credit health. Unfortunately, many people only learn the proper way to manage their credit cards after they’ve had credit card troubles. Thankfully, there’s more credit information available than ever before and consumers can learn to master credit cards even before applying for one. Every person who has a credit card, or may one day have a credit card, should know these 22 ways to master credit cards.

Choose the right credit card for you.

There are hundreds of credit cards to choose from and any of them could be the right or wrong one for you. Before you apply, assess what you want from a credit card — a low interest rate, travel rewards, a 0% balance transfer rate — and apply to credit cards that fit the criteria.

Read the fine print.

At a very minimum, you should read the credit card terms and conditions, which explains the pricing of your credit card. Once you’re approved, you’ll receive a full credit card agreement, which is a much longer contract that details all the rules of your credit card. You get a copy of your current credit card agreement by calling your credit card issuer, checking your online account, or by visiting the CFPB's credit card agreement database.

Understand your interest rates.

Credit cards come with different interest rates that apply to different kinds of balances.

It’s important to know which interest rate applies to which of your balances. Your credit card payments, particularly if you pay above the minimum, will be split among balances with different interest rates. This is done automatically based Federal law and the credit card issuer's payment allocation policy, even if you want the payment to go toward just one balance.

Know your fees.

Some fees — like an annual fee — are charged automatically just for having your card. Other fees — like a balance transfer fee — are charged only for certain types of transactions. Understanding your credit card fees is the only way to minimize the cost of having credit. If you manage your credit card wisely, you can use your credit card for free.

Read your credit card statement.

Your credit card statement contains a wealth of information about the activity on your account during the previous billing cycle. Don’t take for granted that everything on your credit card statement is accurate. You may find payments that weren't applied correctly, returns that never posted to your account, or even fraudulent transactions on your account. And if you never read your credit card statement, you'll never find these errors.

Sign up for your online account.

Managing your credit card has never been easier. Most credit card issuers allow you to create an online account for managing your credit card, making or scheduling payments, reviewing transactions, confirming your credit limit, and more. You may even be able to download a smartphone or tablet app to make managing your credit card account even more convenient.

Know your rights.

Every credit card applicant and credit cardholder have specific credit card rights. For example, your credit card issuer has to keep your payment due date on the same calendar day each month and send your credit card statement at least 21 days before the due date.

Don’t become dependent on credit cards.

A credit card dependency is dangerous and can lead to debt, money trouble, and bad credit. If you notice you’re using credit cards more and more each month without paying the balance in full, it’s time to rein in your credit card habits. Close your accounts and pay them off if it keeps you from getting too far into debt.

Keep up with your due dates.

Paying your credit card on time each month is key to avoiding late fees and maintaining a good credit score. Each credit card payment will be due on the same date each month, so at least you don’t have to deal with different due dates. Most credit card issuers will let you change your due date if there’s another date that’s more convenient for you. You can use a checklist or set reminders on your phone to keep up with your due dates.

Paying in full is ideal.

The best way to manage your credit card balance is to pay it in full each month. By paying in full, you avoid interest and eliminate the risk of going into debt. Knowing that you’re paying your balance in full requires you to keep your credit card spending in check.

Paying more than the minimum is next to ideal.

If you can’t pay your balance in full, pay as much as you can over the minimum payment. Otherwise, your balance will go down by only a little since most of your payment will go toward finance charges. It takes longer to pay off your balance and you end up paying more in interest than if you paid your balance off faster.

Pay off your cards one at a time.

Rather than trying to pay down multiple balances over a period of time, focus on paying off one credit card at a time. Put all your extra money toward that one card while paying the minimum on your other credit cards. Keep applying this technique to each of your credit cards until they’re all paid off. (This is one of the few times it’s ok to pay the minimum on your credit card.)

Always check your balance and available credit before spending.

Before making new credit card purchases, check your credit card balance by calling or logging into your online account. This is especially important if you’re planning to do a lot of shopping or you’re making a big credit card purchase.

Keep your purchases within your budget.

The key to keeping your credit card balance at a level that you can afford to pay in full each month is to consider your budget as you make purchases. Once your credit card spending exceeds what’s available in your budget, you’re at risk of being unable to pay in full that month.

Confirm that your payments are applied correctly each month.

Whether you mail your payments, make them online at your credit card issuer’s website, or pay through your bank’s online bill pay, you should always confirm that your payment was applied correctly. Contact your credit card issuer if you notice anything wrong with your payment, especially if it doesn't match your bank records.

Don’t take out cash advances or use convenience checks.

Cash advances are one of the most expensive types of credit card transactions. Not only do cash advances always incur a fee, you also don’t get a grace period. Interest starts accruing right away, so no matter how quickly you can pay off your cash advance you’ll always pay interest. And if you have another type of balance on your credit card, your payment may be split among the balances and the cash advance will take longer to pay off.

Don’t be shy about contacting customer service.

You can — and should —​ contact your credit card issuer with any questions or concerns about your credit card account. Contact your credit card issuer, for example, if you spot fraudulent charges on your account, misplace your card or have your wallet stolen, have a question about your rewards program, or you’d like to request a bigger credit limit or lower interest rate.

Report suspicious charges.

Contact your credit card issuer if you notice transactions on your account that you didn’t make regardless of the amount. Sometimes, thieves “mark” credit cards by making small purchases first to confirm the credit card is valid. The thieves later hit up the credit card for bigger purchases. Federal law and credit card policies typically limit your liability for fraudulent charges, but preventing theft saves you the hassle of having the charges reversed.

Don't have too many credit cards.

Having too many credit cards will make it almost impossible to master them. The payment due dates are hard to keep up with. There are too many payments to make each month. And it's hard to know which have balances and which don't. What counts as "too many credit cards" varies from person to person, but if your credit cards are becoming unmanageable, it's a sign that you already have too many.

Don’t forget that your credit card balance is a loan.

Studies have repeatedly shown that people tend to spend more with credit cards than with cash. But, this increased spending is what gets people deep into debt. As you use your credit card, always keep in mind that you have to pay back every credit card purchase you make. Each credit card purchase you make is borrowing from your future income.

Watch for better deals than the cards you have.

Credit card issuers are continually releasing better credit cards or improved credit card terms. As your credit improves, you may qualify for a better credit card than the one you already have. If you’re paying a high interest rate or your credit card doesn’t have a great rewards program, look out for a better credit card. Your current credit card issuer may be willing to give you a better deal to keep you from switching, but if you qualify for something better, there’s no reason not to move on.

Don’t be afraid to cancel a card that no longer benefits you.

Closing a credit card can impact your credit score, but you can typically rebound from this if you have a strong credit history. If your credit card has a high annual fee, low credit limit, or ridiculously high interest rate, it’s ok to close that credit card. Make sure you pay off the balance and check your credit report to confirm the credit card was closed.