It’s no secret that credit cards can be a consumer’s best friend or worst enemy. You can build credit and earn rewards or cash back if you manage the card properly. However, irresponsible use can wreck your credit score and finances.
Read on for insider secrets to help you maximize the plastic in your wallet:
Tip 1: Interest rates are sometimes negotiable
Does your credit card have a high-interest rate? If you’ve responsibly managed the account over time and your credit score is up to par, the credit card issuer may be able to reduce your rate. However, you’ll have to call in to plead your case, and a credit check may be required.
Tip 2: Fixed interest rates aren’t always “fixed”
The fine print for your card may have indicated that your interest rate was set at a fixed percentage. At first glance, you probably thought the rate would remain the same over time. Unfortunately, it doesn’t always work this way.
The credit card issuer has the green light to increase the interest rate at any point, but there’s a catch. They must notify you in writing at least 45 days before they implement the rate hike, as mandated by the Credit CARD Protection Act of 2009.
Tip 3: Payments can be applied the same day
Payments usually aren’t reflected in your available balance until the next business day, and some credit card issuers delay posting times even further.
What if you need to make a purchase and your payment is still pending? Give the credit card issuer a call and request that they apply the payment immediately. There are no guarantees that they’ll say yes every time, but some will make an exception on occasion.
Tip 4: Paying late could cost you more than money
When you’re late on a payment, there are a few negative consequences that may follow.
This amount is usually around $35 and applies the minute you miss the cutoff. So, if your bill is due on a Friday by 2 pm and you hit submit at 2:02 pm, you could be charged. (Bonus tip: if you’re not a habitual offender, call and request that the fee be waived because you’ve of your positive account history).
Damage to your FICO score
If the account reaches 30 days past-due, the negative payment history could be reported to the credit bureaus and tank your score. Negative marks remain on your credit report for seven years, but the impact diminishes over time.
The impact on your FICO score isn’t the only thing you have to worry about. Once your account reaches the 60-day mark, creditors can impose a penalty APR. Most penalty APRs are well over 20% and must remain intact for at least six months following the delinquency.
Some credit card issuers will continue to assess this rate even after you’ve made six consecutive on-time payments. To illustrate just how much penalty APRs can cost you, assume that you have a credit card with an outstanding balance of $2,500:
So, if you’re going to be late, call the credit card issuer well in advance. You may be offered a short-term arrangement that will save you money and preserve your credit score.
Tip 5: Paying before the grace period saves money
Do you cringe at the thought of paying interest and wish there was a way around it? If you repay the charges incurred before the grace period ends and by the due date, you’ll avoid interest altogether. However, if you’re just one day late, interest will be retroactively applied to the date of the initial purchase as soon as the new statement is generated.
Quick note: review the cardholder agreement or check with the credit card issuer to confirm your grace period. Some cards, particularly those that cater to subprime borrowers, do not offer a grace period.
Tip 6: You can access your FICO score for free
Want to see your official FICO score, but don’t feel like paying for it? The following credit card issuers automatically include your updated score on the monthly statement:
- American Express®
- Bank of America
- Barclaycard US
- Capital One
- Credit One Bank
- S. Bank
In addition, most will allow you to view your score directly from the online dashboard.
How to find the best credit cards on the market
It depends on what you’re looking for in a credit card. Some consumers want to earn rewards and cash back on their purchases. Others simply want a card with a low APR and no annual fee.
Regardless of what you’re seeking, SuperMoney’s credit cards reviews and comparison tool can aid in your search. You can sort credit cards by features and read user reviews, which will help you choose a card that best suits your needs.
Allison Martin is an accomplished finance writer who has written for publications including The Wall Street Journal, MoneyTalksNews, The Simple Dollar, and Credit.com. Her work has been featured on Fox Business, Yahoo! Finance, MSN Money, and ABC News. She enjoys writing about personal development, entrepreneurship, personal finance and is a Certified Financial Education Instructor (CFEI).