What are your credit card habits? If you are like most people, you probably just use your credit cards to purchase goods and services while paying little attention to the details of your credit card usage. And by doing so, you risk paying too much in interest and fees, and can miss out on value rewards and benefits.
So now is the time to take a fresh look at how you use your credit cards, and adopt these five habits for 2015:
1. Pay the Balance in Full and on Time
There is no single better habit than to avoid interest on your credit cards by paying each month’s statement balance in full. About half of American consumers do so, while the other half tend to carry a balance, at least some of the time. Avoiding interest not only saves you money, but keeping your debt low and making on-time payments can help you work your way toward, or maintain, a high credit score. (If you are not sure what yours is, you can get a free look at your credit score and a summary of your credit report from Credit.com, along with an action plan for improving your credit.)
2. If You Have No Debt, Start Earning Rewards
If do not carry credit card debt, but are also not earning rewards from your credit cards, you might want to reconsider a reward-earning strategy. The most competitive reward credit cards offer valuable points, miles and cash back for spending on those cards. And even among reward credit card users, many have the same cards that they have held for years, and have not switched to more competitive products. Unfortunately, these cardholders are leaving money on the table. Look into whether there are cards that can offer you better rewards and consider making the switch if it makes sense for you.
3. Scrutinize Every Statement
In 2014, so many retailers were hacked that it became difficult to keep track of each one. Thankfully, cardholders’ liability for fraudulent charges is limited. Nevertheless, you have to notice the unauthorized charges and alert the card issuer in order to have the transactions reversed. So it is more important than ever that you look through each statement to find any charge that shouldn’t be there.
4. Make Use of Your Card’s Benefits
Many airline credit card users know that they earn frequent flier miles, and that they might even get a free checked bag, but most fail to look over all of the other benefits offered. In fact, all types of credit cards may come with valuable purchase protection and travel insurance policies that few cardholders ever use. That’s too bad, since these policies can extend the manufacturer’s warranty on your new television or computer, compensate you if your luggage is lost, or offer a refund if the price drops on a purchase after it is made.
5. Stop Paying Fees
Credit cards can have many fees, but there is usually a way around them. If you travel outside the United States, you may be paying a 3% foreign transaction fee, but now there are many cards that you can get that don’t charge this fee. You can avoid late fees by setting up automatic payments, or by choosing a card with no late fees. And to avoid annual fees, be sure to simply ask to have them waived, or choose a card that does not have them.
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Image: Andersen Ross
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Note: It's important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.