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Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
At O1ne Mortgage, we prioritize consumer credit and finance education. Understanding how to use credit cards wisely can help you earn rewards, protect yourself from fraud, and build a strong credit history. Here’s a detailed guide on how to make the most of your credit cards.
To maximize your credit card benefits, 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:
Additional details about your card’s terms may be further down in your cardholder agreement or on the card issuer’s website. These include:
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. Once your bill is 30 days past due, the credit card issuer can report it to credit bureaus. This negative mark remains on your credit report for seven years.
Streamline your monthly bill payments to stay on top of due dates. You can set phone and calendar reminders to pay bills, schedule one day a month to pay all your bills, or set up automatic payments to cover at least your minimum amount due. You can easily add extra payments during the month or set your autopay for a higher amount—just make sure there’s enough in your bank account to cover it.
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. Credit cards charge compound interest—interest on your balance and on the interest that accrues—which can get expensive.
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.
Paying just the minimum balance on a high credit card balance can mean ending up in a debt cycle that’s hard to escape. Use a credit card payoff calculator to create a plan to pay down your debt.
Storing your credit card information with online retailers or linking it to digital payment accounts makes spending so simple, you can easily overspend without realizing it until the bill arrives. The lure of rewards or introductory bonuses might also tempt you to overspend.
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. You can maximize credit card rewards by matching the card to the purchase; for instance, use a card offering cash back on groceries at the supermarket.
A growing credit card balance can hurt your credit score if your credit utilization ratio gets too high. This ratio compares the amount of credit you have available to the amount you’re currently using. A credit utilization ratio of 30% or more can have a more significant negative effect on your credit score.
To avoid negative impacts on your credit, aim to keep credit utilization below 30% (for a card with a $1,000 credit limit, that’s a balance of under $300). Those with the highest credit scores tend to keep their utilization below 10%.
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:
In addition to following the steps above, you should avoid these common credit card mistakes.
Credit scoring models measure utilization of each credit card and of all your cards in total. Even if your total credit utilization ratio is below 30%, using more than 30% of your available credit on one card can negatively impact your credit score. Maxing out a credit card can also be a sign you’re living above your means and need to cut back. To get your credit card balance under control, stop using the card and make a plan to pay down the debt. This might mean putting yourself on a strict budget or getting a side gig to earn extra money.
Closing a credit card you no longer use may seem like a smart move, but it can actually harm your credit score. Closing an account reduces your total available credit, instantly raising your credit utilization rate. A long history of using credit is a plus; closing a card lowers the average age of your credit accounts, which can ding your credit score. If the card has a fee, see if you can downgrade to a card without one. If it doesn’t have a fee, use the card regularly for one small purchase a month, such as a streaming subscription, and make on-time payments to positively impact your credit score.
Savvy use of credit cards can boost your financial health. So can monitoring your credit score. Experian’s free credit monitoring service gives you access to your Experian credit report and FICO® Score, plus real-time alerts of changes to your credit report so you can quickly address potential problems.
If your credit score isn’t where you’d like it to be, bringing late accounts current and paying bills on time can help improve it. Looking for a new credit card? Use Experian’s card comparison tool to shop for cards that fit your credit profile.
Paying off your credit card debt in full each month is an excellent way to build and maintain your credit. Learn how to pay off credit card debt faster.
Your credit utilization ratio is one of the most important factors of your credit score—and keeping it low is key to top scores. Here’s how to do it.
Credit mistakes can cost you big time, but it can be tough to know what’s a mistake and what isn’t. Here are some common mistakes and how to avoid them.
Late payments can seriously harm your credit score, but you can easily avoid them with a flexible payment schedule, automated payments, and other tactics.
For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to help you navigate your financial journey with ease and confidence.