Written by 1:00 am Financial Wellness Views: 5

Top 10 Credit Card Tricks | How To Consolidate Credit Scores

Alright, so what’s the difference between a debit card and a credit card? Do you know how to build credit? Here’s all you need to know!

In the modern world, wallets are overflowing with colorful cards that have replaced the need for bulky cash. Even now, the wallets themselves have become digital!

But with so many choices at our fingertips, it is tricky to understand the difference between a debit card and a credit card.

So, What’s The Difference?

Photo credit: Robert Kirk via Getty Images Signature

First up, we have the debit card. Try and picture it as your checking account’s best friend. Whenever you use your debit card to buy something, the money magically disappears from your checking account right away, like paying with a check, but way faster and more secure.

Photo credit: alexroz via Canva

However, credit cards don’t take money directly from your checking account. Instead, they act like a loan from a bank or credit union. When you swipe your credit card, you’re essentially borrowing money up to a certain limit, with the agreement to pay it back within a specific time frame, usually a month.

This borrowed amount, plus any interest and fees, gets added up into a monthly bill that you’re responsible for paying off.

So, what’s the difference? It really boils down to where the money for your purchases comes from. Debit cards are like spending tools directly connected to your own cash, while credit cards give you access to borrowed money that needs to be repaid later.

With that said, since credit cards must be repaid later, there is more risk and even more rewards!

10 Credit Card Tricks

Photo credit: Maria Vonotna via Getty Images

When used responsibly, credit cards are a fantastic tool for building credit score, snagging awesome rewards, and even enjoying some purchase protection benefits. However, if misused, they can quickly lead to a mountain of debt and a plummeting credit score.

So, how can you leverage these plastic rectangles for financial good? These 10 unique credit card tricks will help you build a stellar credit score while racking up valuable rewards…

i. What Automation Does

Paying your credit card bill on time is the single most important factor when it comes to your credit score. Always set up automatic payments to ensure you never miss a due date.

ii. Utilize But Don’t Abuse

Credit utilization ratio, the percentage of your credit limit you’re using, is another major credit score influencer. While keeping your balance at zero is ideal, it doesn’t necessarily translate to the highest score.

Experts recommend maintaining a utilization rate below 30%. Aim to pay off your balance in full each month, but if you carry a balance, keep it under this magic number.

iii. Become A “Budgeting Buddy”

Many credit card issuers offer budgeting tools within their online portals or mobile apps. These tools can help you categorize your spending, track progress towards goals, and even set alerts to prevent overspending. Of course there are other budgeting apps, but it’s much more simple to stay on one app all together.

iv. Friend the “Pay Now” Option

Some credit card companies allow you to make small payments throughout the month towards your outstanding balance. Personally, I think the this is a fantastic strategy to keep your utilization rate low and curb the urge to overspend.

v. Target Spending With Rewards Cards

Love to travel? Gas guzzler? Foodie extraordinaire?

Similar to the Optum Rewards Card, there’s a credit card with a rewards program tailored to your spending habits. Look for cards that offer cashback, travel points, or bonus miles on purchases that align with your lifestyle.

vi. Leverage Introductory Offers

Many credit cards entice new customers with enticing 0% APR introductory periods on purchases or balance transfers. Take advantage of these offers to pay down existing debt or make significant purchases interest-free, but be sure to have a plan to pay off the balance before the introductory period ends.

vii. Request Regular Limit Increases

As your credit score improves and responsible credit card use becomes your norm, request regular credit limit increases from your issuer. In turn, this improves your credit utilization ratio by increasing the overall available credit without impacting spending habits.

viii. The Power Of Authorized Users

Adding an authorized user with a good credit history to your account can give your score a slight boost. However, proceed with caution. You’re ultimately responsible for their charges, so only add someone you trust to manage their credit responsibly.

ix. Become a Review Reader

Before applying for a new credit card, take the time to read online reviews from other users. Reviews can offer valuable insights into the card’s rewards program, customer service, and any hidden fees or drawbacks.

x. Be a Loyalty Advocate

Don’t be afraid to leverage your loyalty as a cardholder. If you find a better rewards program elsewhere, contact your current issuer and see if they’ll match the offer to retain your business.

Questions, Comments, Concerns?

Remember, credit cards are tools, and like any tool, they can be incredibly beneficial when used correctly. By implementing these credit card hacks, you can build a strong credit score and earn valuable rewards.

Now that you can differentiate between a debit and credit card, what will you spend more with?

Will you start building credit up?

Thanks! See you soon!