5 Ways to Kick Ass at Credit Cards

Now you know the importance of a credit card and how much it can benefit both yourself and your credit score. Ready to learn how to maximize your benefits?

1. Do your research.

I highly recommend doing quite a bit of research before opening up any type of credit card. Each time you open a new line of credit, your credit score takes a hit. I know this seems counterintuitive, but it keeps you from opening up multiple accounts too quickly. So take your time, research a few cards, and make sure you apply for one that caters to your needs the most. Most importantly, make sure your card offers you some sort of reward. This is what makes a credit card more beneficial to you than a debit card.

For example, I absolutely love to travel. I spend almost every free second and spare dollar I have exploring new placing and experiencing new cultures. When I applied for my fist credit card, it was important to me that my rewards benefit my travel addiction. This is when the love at first sight with Capital One comes in. I got a 30,000 mile bonus when I spent $1,000 in my first three months. I also earn 1.25 miles for every dollar I spent. Slowly but surely, the points added up and I got my happy ass on a plane for free.

2. Never max out your card.

Your credit utilization factors into your credit score. Remember, its a score that judges your ability to pay back money. A credit card company will give you a limit, or an allowance, based on your annual income. However, FICO knows that if you make $20,000 annually, you will not be able to pay off a monthly balance of  $1,500. Often, they will give you a higher limit than you need hoping that you spend too much and fall into their debt trap. Ideally, you should use 20% of your credit limit. This is a safe number that illustrates your ability to control your spending and highlight your success in paying off your bill in full each month.

3. Review your transactions.

I review my credit card statement each month before I pay it off. It's important to make sure it is accurate and each purchase was made by you. Unfortunately, credit card fraud is common and could easily happen to you. Reviewing your statement will make you feel at ease before paying off your bill.

This was another benefit that heavily weighed my credit card decision. Capital One provides excellent customer service when dealing with fraudulent activity or repeated transactions. Read review and ask around when researching to see which companies provide great customer service as well as competitive rewards.

4. Pay off your bill.

I can't tell you how many people think that in order to build credit, you need to carry a balance on your card. This is absolutely not true. Carrying a balance from month-to-month will only resort in you paying unnecessary interest charges. I promise, pay your bill off completely each month. You won't accrue any extra fees or interest and your credit score will rise.

5. Don't choose a card based on the interest rate.

I know this sounds silly. You should absolutely care about what interest rate you're paying. But hear me out, the point is not to ever pay any interest.

I purposely do not know the interest rate on any of my credit cards. I've never paid a cent of interest, so it's irrelevant information. If I know my interest rate, I can easily calculate what my fees would be from month-to-month if I only made the minimum payment. I force myself to be in the dark whether it be $2 or $200. This encourages me to pay off my card every single month, no matter the balance. If it's $2, you may be persuaded into paying the minimum and paying the bulk of the bill next month. On the other hand, no one wants to pay $200 extra. Be in the dark, always assume it's a huge fee, and pay off your bill.

Each dollar you spend will add up, I promise. Keep at it and start planning your vacation, you deserve it. Most importantly, enjoy your rewards! It's not very often that a company will pay you to use their product.