Credit Card Andy

Teaching the Basics of Personal Finance

Use Your Credit Card Like a Boss


Here are five ways to make sure you’re getting the most out of your credit card.

1. Always pay your bill in full

I can’t stress this enough. Do not fall into the death trap of just paying the minimum balance. If you find yourself not being able to pay the entire bill in full, STOP using your credit card. Don’t think about using it until you’ve paid the entire bill. If this happens more than once, a rewards credit card is not for you. You will pay more in interest than you make from the rewards.

2. Request a credit line increase every 6 months

This is something new credit card users are often unaware of. You know that limit the credit card company put on your card? You can (and should) ask them to increase it about every 6 months.

Back in the day, banks used to give out credit line increases left and right. These days, with all the hoopla about credit cards they no longer preemptively offer them to you. That’s no excuse for you, the informed credit card user, to miss out. Most credit card companies let you do this online, or you can just give them a quick call. If you’ve been using your card regularly and responsibly, they are likely to automatically increase your limit. If you’re a nerd like me, you can mark the 6 months on your calendar every time you request an increase so you know when to request again.

Why? Two reasons. Ironically, it’s hard to get a credit line increase when you actually need it. The credit card company won’t all of a sudden triple your limit when you need it. What you can do is regularly request increases over a few years while building up your track record of making payments on time. The second reason actually ties into my next point…

3. Keep your credit utilization ratio below 30%

First, what is your credit utilization ratio? It’s how much you put on your credit card divided by your total credit. So if you have 2 credit cards, each with a $1,000 limit, your total credit is $2,000. If you spend $500, even if it’s only on one of those cards, your credit utilization would be $500/$2,000 = 25%.

A** **credit utilization ratio below 30% is saying, “Hey, I can handle borrowed money”.

By increasing your credit line, you are effectively lowering your credit utilization ratio. If you up the credit lines on both of those cards to $2,000 each, you have reduced your credit utilization to $500/$4,000 = 12.5%!

4. Get bill reminders sent to your phone

One of my favorite online tools, Mint, can send you a text message a certain number of days before a bill is due. I sometimes glaze over my email, but I always read my text messages. With Mint’s alerts, I never miss a bill.

If you have a smartphone, look into both Mint’s and your credit card provider’s mobile apps. They can throw you a notification instead of the text message if you prefer. The more reminders, the better.

5. Take advantage of the included services

Credit cards have some very underutilized services. _Two of the most popular are free extended warranties and free rental car insurance. _If you purchase an item that comes with a manufacturer’s warranty, most cards will double that warranty up to a year. So if you purchase your laptop on a credit card and it breaks right after the manufacturer’s warranty expires, your credit card will cover the repairs. Similarly, if you get into an accident with a rental car that you put on your credit, the credit card will cover it.

If you’ve had a credit card for a while now but haven’t requested a credit line increase, here’s a friendly reminder to request that increase!

What are some ways you use your credit cards like a boss?