“Smart Credit Card Usage: A Comprehensive Guide”

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Maximizing Your Credit Card Benefits

At O1ne Mortgage, we prioritize consumer credit and finance education. This post aims to provide an objective view to help you make the best decisions regarding your credit card usage. For any mortgage service needs, call us at 213-732-3074.

Understanding Credit Card Fees and Terms

To make the most of your credit card, familiarize yourself with its fees and terms. The “Schumer box” at the top of your cardholder agreement lists the card’s most important interest rates and fees, including:

• Purchase APR: The interest rate you’ll pay on purchases for any remaining balance you don’t pay off before the grace period ends.
• Penalty APR: Missing a credit card payment can trigger a higher penalty APR.
• Balance Transfer and Cash Advance APRs: Cash advances typically have higher APRs than purchases.
• Annual Fee: Cards that charge annual fees often offer rewards and perks.
• Cash Advance Fees: There may be fees for taking a cash advance on your credit card.
• Balance Transfer Fees: Transferring a balance to a credit card typically incurs a fee of 3% to 5% of the amount transferred.
• Late Fees: Card issuers can impose late fees if your payment is even one day late.
• Returned Payment Fees: You might pay a fee if the account used to pay your credit card bill has insufficient funds.
• Foreign Transaction Fees: Purchases outside the U.S. or in currency other than U.S. dollars can trigger a foreign transaction fee.
• Grace Period: The time between the end of the card’s billing cycle and the payment due date.

Always Pay Your Credit Card Bill on Time

Paying a credit card bill late can incur late fees or penalty APRs. Because payment history is the biggest factor in your credit score, a late payment can also damage your credit. Streamline your monthly bill payments to stay on top of due dates by setting phone and calendar reminders or setting up automatic payments.

Pay More Than the Minimum Payment

Making a minimum payment is better than missing a payment, but paying your credit card bill in full every month is ideal. If making the minimum payment leaves a balance on your account, you’ll incur interest on that amount. To avoid accumulating interest, pay your statement balance in full. If you can’t pay the entire statement balance, pay as much as you can.

Keep Credit Card Balances Low

To keep your card balances low enough to pay off each month, set a budget and avoid impulse purchases. Using credit cards for things you’d buy anyway (such as groceries or gas) instead of for splurges or impulse buys can help you keep spending in check. A growing credit card balance can hurt your credit score if your credit utilization ratio gets too high.

Set Up Account Alerts

Putting text or email alerts on your credit card accounts can help you track your spending, prevent late payments, and spot fraud. Alert options may vary by card issuer, but you can usually choose:

• Payment and Balance Alerts: Payment due date reminders, payments posted, approaching credit limit, and balance updates.
• Transaction Alerts: Purchase alerts, foreign transaction alerts, card declined alerts, cash advance alerts, and balance transfer alerts.

Common Credit Card Mistakes to Avoid

In addition to following the steps above, you should avoid these common credit card mistakes:

• Maxing Out Your Credit Card: Using more than 30% of your available credit on one card can negatively impact your credit score.
• Closing Unused Credit Cards: Closing an account reduces your total available credit, instantly raising your credit utilization rate.

Savvy use of credit cards can boost your financial health. For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you make the best financial decisions.

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