So you’re ready to own your first credit card, but you don’t know where to start? Our credit card comparison page can help you get an idea of the best credit cards in the market for you, but do you know the best way to use them?
Use Them at the Right Place and Time
Every credit card is different, depending on the issuing bank and the product they wish to tailor for you. Therefore, some cards are perfect for shopping and dining, while others may be more suited for petrol and groceries. Using credit cards that offer you the best rewards for the corresponding spending category will maximise the rewards you earn, which directly (or indirectly, if earning points) means better bang for your buck!
Redeem Your Rewards
If you’ve decided against the easy and flexible cashback option, you’ll probably be gaining rewards points for your credit card transactions. That’s great – just remember to redeem your collected points once in a while! Most credit cards have some type of limit on the amount of points you can transfer, or a validity period for the points you earn. Redeeming small items is still better than letting your points expire needlessly.
Understand the Cost of the Cards
Many entry-level credit cards are offered free with no annual fee, but many other cards do come with fees. Then there are late payment fees, cash withdrawal fees, and annual fees, to name a few. Some of these fees, such as annual fees, may be waived upon achievement of a criterion, such as swiping the card a number of times within a time period, but others are unavoidable, such as cash withdrawal fees. Truly understand the cost of owning a credit card before you commit yourself.
Simply Choose Cards
Everyone’s spending habits and income levels are different, which is why banks have a range of credit cards on offer. That said, when you choose a credit card, you should always choose credit cards that target your key spending areas. Don’t simply pick the first one you see at the bank! Instead, try using credit card comparison sites to find the best match for you.
Carry a Balance
Credit cards are meant to provide you with a cashless payment facility. The credit limit you have on the card is basically your maximum “spending budget” per billing cycle, but don’t hit that maximum if you can’t pay it all off by the next billing cycle! If you find yourself unable to finance your credit card’s monthly payments, you’re probably over-spending even if you haven’t hit the credit limit of your card yet. Credit cards offer credit, but they are not meant as loans, so their interest rate charged for carrying balances is really high, typically around 18%. Emergencies happen, but try your best to avoid carrying a balance and incurring a high accruing interest.
Miss Credit Card Payments
The next thing to remember when you own credit cards is to always pay off your statement balance as promptly as you can. Time flies, and sometimes we may lose track of dates, but when it comes to credit card repayments this is a costly mistake to make. Missed payments will be interpreted as late payments and banks will consider you to be carrying a balance. You’ll be slapped with late payment fees plus high interest rates, and even worse, it will damage your credit rating for months to come! This will make it difficult for you to apply for loans while the black mark stays in place. Pay your dues promptly and all will be fine.