When choosing the right card, there's a lot to think about, from interest rates to rewards programs and credit limits.
1. Apply for a credit card you think you’ll be approved for
There are a few things to consider when you’re looking for a credit card that you think you’ll get approved for. Your credit score typically has a big impact on whether you’re approved. If you don’t think your credit score is good enough, you may want to work on improving your credit before you apply for a credit card.
Another way to go about this is to apply for a card you’ve been preapproved for. If you’ve been preapproved for a card, it can indicate you’re more likely to be approved when you apply, although it’s still not guaranteed.
2. Don’t apply for several cards at once
When you apply for multiple credit cards in a short period, it can have a negative impact on your credit score. Each time you apply for a new credit card, the issuer will perform a hard inquiry. Hard inquiries can lower your score by a few points for up to a year and can stay on your credit report for up to 2 years.
3. Pay off your entire balance each month
Paying off your entire balance by the due date each month has several benefits. First, you can avoid paying interest on your credit card purchases. Second, it can help improve your credit score by showing that you are a responsible borrower who pays their debts in full and on time. Finally, it can help you avoid late fees.
4. Keep your credit utilization low
Your credit utilization is the percentage of your total available revolving credit that you’re using. When you keep your credit utilization low, you show creditors that you’re a responsible borrower who isn’t maxing out their credit lines. Maintaining a low credit utilization ratio can also help improve your creditworthiness.
5. Pay more than the minimum
Ideally, you pay your credit card balance in full each month. But if you can’t, there are a few things to keep in mind. If you only make the minimum payment on your credit card each month, it can take you much longer to pay off debt and you can end up paying much more in interest. Paying as much as you can afford each month can help you get out of debt faster and save money on interest.
6. Use a spending analyzer to calculate your budget
If you're trying to get a handle on your spending, a spending analyzer from your credit card issuer can be a helpful tool if available. This can give you insights into where you're spending your money and help you identify ways to cut back.
7. Maximize the benefits from rewards
Find the right rewards card for you
There are many different rewards cards out there. When trying to find the right card for your needs, consider what kind of rewards you're looking for. For example, you might want a card that offers travel rewards if you travel often.
Use different types of rewards cards
One way to get the most value out of your credit cards is to combine the benefits of different cards. For example, some cards offer additional cash back for purchases in certain categories and others offer the same amount of cash back on every purchase. You might use one card to buy gas and groceries and another for all your other purchases.
8. Save on interest with low intro or promo APR offers
If you’re looking to make a big purchase that you foresee being able to pay off relatively quickly, a new credit card with a low introductory APR offer could help you save money on interest. Alternatively, a credit card you already have may occasionally have a low promotional APR offer.
9. Use autopay to avoid late payments
Payment history is an important factor in your credit score. Late payments can have a significant negative impact on your credit score depending on how long these payments are overdue. If you're frequently late with your credit card payments, it can indicate to lenders that you're not a reliable borrower.
To avoid this, autopay may be a good option to help ensure you make payments on your credit card balance on time each month from your linked bank account. Autopay is a feature that allows you to automatically pay your minimum payment due or some other portion of your credit card balance and set the frequency of those payments.
10. Use credit cards for needs, not wants
When it comes to using credit cards responsibly, one strategy is to use them only for needs, not wants. Credit cards can quickly lead to significant debt, including high interest charges, if they're not used carefully. If you use a credit card for a want, you may end up spending more than you can afford to pay back.
11. Check your credit reports regularly
It's important to check your credit reports regularly for errors. You can get 1 free credit report from each of the 3 major credit bureaus every 12 months.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
