How Much of My Credit Card Should I Use

A credit card refers to a payment tool that allows you to borrow from your issuer. You can get one from a bank or any other financial company. In most cases, they require you to have credit scores, although you can get a card without any borrowing history, as we shall see. If you want to have good records of your loan usage, you must use it appropriately. But how much of my credit card should I use?

We shall check on the right amounts of money you can spend from your card to be in a position to register good usage. Financial experts recommend that you should not use too much of your line of credit as that can show a bit of irresponsibleness. Financial companies begin holding their hands when you apply for a credit card or even a personal loan.

Issuers usually check your creditworthiness by making hard inquiries from the credit bureaus. By the way, anytime you take a loan or credit card, financial companies report your usage and repayments to the bureaus. These are bodies entrusted by the federal government to keep the banking information of borrowers. They use the information to calculate scores for various individuals as reported by financial companies.

How to get a credit card?

You can get one via online searches or at a physical branch of an issuing financial institution. When getting one, the first thing you should do is check your scores. You can check them online from the bureaus at a fee. There are also some sites such as creditKarma and CreditWise that issue free scores.

Once you know your scores, you can check the available ones from online or physical branches. You can do so by visiting the concerned institutions’ websites or asking your friends and relatives about some of the cards that they know.

For your information, it does not matter your scores since there are credit cards for bad credit instant approval and no deposit that you can get today. The only disadvantage with such cards is that they have low limits and high-interest rates. Therefore, they may end up draining you financially.

Once you have known the best one to apply for, you can then submit the relevant details to the institution of choice. Remember that you should be at least 18 years old and possess all the necessary documents.

Once the issuer approves your application, they may call you to pick it at a branch or send it to your destination. As soon as you get it, you should activate it to begin using it for various kinds of transactions.

What factors should I check when getting a credit card?

how much of my credit card should I use

If you want to benefit maximally, you should consider the following things.

i) The credit limit

You need to check the one with the highest limit to do not utilize a more significant percentage of your borrowing limit. The credit limit is the highest amount your issuer allows you to spend per borrowing cycle. The limit depends on your scores. The higher your scores, the better your limit and vice versa.

ii) Interest rate

Interest rate refers to the percentage of the borrowed money you should pay on top of the borrowed amount. That is where the issuers make money from. It is crucial to check on it as some people indulge in problems once they realize that they got a card with a very high-interest rate. However, you may be unable to avoid the high-interest rates if you have poor scores.

Most banks have guaranteed approval of unsecured credit cards for bad credit, especially if you have a legitimate source of money that you get through the institution. They know that they will make a lot of money out of it.

iii) Rewards

They include cash backs, miles, and points. Some reward you when you buy goods and services at certain stores. Rewards help you to save a substantial amount of money when you redeem.

iv) Fees

There are various fees that a credit company can charge. We have monthly fees, annual fees, late payment fees, inactive fees, foreign transaction fees, cash advance fees, etc. The fewer the fees, the more the benefits. Therefore, ensure that the card has few fees. Unfortunately, it is difficult to get one with no fees.

v) Customization

When a card is customized, it gives you a sense of ownership. Therefore, it is essential to get one that allows you to customize with the most amazing photos or art. That way, you will have much joy when using the card. When customizing, you can put the photo of your family, your favorite photo, your kid’s drawing, and so on.

vi) Security

Before getting a card from a financial company, check on the security measures on the card. Ask yourself whether the card is safe when transacting at various places. Someone may use your card, thus putting you into unnecessary debt.

If possible, look for one with several online layers of security and that which have Zero Liability Protection. Also, cards that allow you to lock them remotely are the best. However, you should also be responsible to prevent any misfortune.

vii) Online card management

Nowadays, it is essential to get one that allows you to manage your money online. If the issuer allows you to use your card over an app, the better. You will be able to track your card usage and see the borrowing limit remaining.

Which are the various types of credit cards?

We have two main types of credit cards. We have secured and unsecured ones. Secured ones are the ones that require a security deposit before getting them. They are usually best for people with no borrowing history to build credit. You can also build your credit with a secured credit card if you have bad scores.

On the other hand, unsecured ones are the ones that require scores. These require you to have used credit before getting one. We have unsecured credit cards for bad, fair, good, and excellent scores. As I mentioned earlier, the better you’re scores, the lower your interest rate and the higher your limit.

How do you use a credit card?

A credit card is a payment tool that you can use as many other payment cards in the market, such as debit and prepaid ones. The following are the various ways you can use it.

a) Buy goods and services

You can purchase your goods online using the card number, CVV, or expiration date. However, when paying online, you should use reputable sites such as Amazon, eBay, and Walmart. You can also utilize the card to buy goods and services at a store. Payment of goods and services is the primary usage of the card.

b) Pay bills

There are various bills that you can pay with a card. You can pay for electricity, water, internet, and a credit card. But can you pay a credit card bill with another credit card? You can pay the debt of another using another one when you carry out a balance transfer.

The balance transferor clears the debt and transfers it to the new card for you to pay with 0% or less interest within a certain period, usually up to two years.

c) Withdraw money

You can withdraw money at an ATM or over the counter. However, using it to withdraw money is not advisable due to the high fees accompanying cash advances. It is suitable only to use the card for your purchases.

How much of my credit card should I use?

As I mentioned earlier, you should not use too much of your limit. Financial experts advise that you use 30% of your limit at most. That is called the credit utilization ratio. You keep your debts low and show responsible behavior in using money by doing so. You can accumulate excellent scores with time.

If you use too much of your limit, that shows how irresponsible you are and can lower your scores. To make sure that you increase your limit, you can ask your card issuer to raise your limit. That is only possible if you have good scores.

Which are the best credit cards for bad scores?

If you have bad scores and need to raise your scores, you might wonder which card to use to grow your scores. There are many credit cards that you can use to grow your scores. But which credit card can I get with bad credit?

You can use either an unsecured one for bad credit or the secured one. For the sake of building credit, the secured one is the best option since it has a low-interest rate.

Bottom line

A credit card refers to a payment tool that allows you to borrow money from your issuer, who may be a bank or credit union. We have two types of credit cards. They include secured and unsecured credit cards.

Secured ones do not require scores. You only deposit money and borrow against it, while unsecured ones require scores. A credit card operates like any other payment card.