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How do you select best credit card in 2023 – Complete guide

Are you looking for a guide on how to select best credit card for yourself? We bring you our expert question base guide to select the best credit cards in 2023.

If anyone looks in their wallet, they will easily find 5-8 credit cards. Everyone is just obsessed with these plastic shiny cards. The United States of America has one of the highest credit card ownership. We have more than 900 million credit cards outstanding in 2022. On average, every adult American owns 5.5 credit cards. We also carry huge trillions of US dollar balances on our credit cards.

People select a new credit card for a number of reasons!

Reasons to select best credit card

  • They may see great rewards from the card
  • Looking to build credit score over time
  • Using credit cards to revolve money before a paycheck arrives
  • The convenience of using cards against carrying cash
  • Traveling for pleasure or business
  • Spending on business spends which will get reimbursed in some time

Whenever you face the choice of selecting one more card, how do you select it? Do you choose the card rationally? Do you select a credit card because you need to have it?  Or you are too polite to refuse a  pushy salesman at a checkout counter. Whatever triggers you, always do a thorough analysis before selecting a credit card. Do not let your emotions trump your financial goals by getting into the trap of too many cards.

Whenever a person applies for a credit card, the credit card agency does a hard pull on the credit score. This affects a person’s credit score negatively. Too many open credit cards also affect the credit score. Also, it’s practically difficult to manage too many credit cards. 

So, if you have decided to go for a credit card and are sure of it. We have listed some of the below criteria to help select you a credit card easily. Ask yourself the below questions to narrow down the credit card.

What are your needs for a credit card?

You should, first of all, identify the need for a credit card. Is the card going to be your primary card or you are choosing a secondary card? Members should always be sure what the primary use of the credit card they are applying for is. Do not apply for a credit card at the insistence of a sales representative or a friend. 

Select a card on the basis of its merit. If you are looking for a rewards credit card. Select one of the best rewards credit cards. Frequent travelers should opt for travel focus credit cards.  They can select co-branded cards from airlines or hotels. These credit cards offer rewards favoring travelers. For example, access to airport lounges, free check-in luggage, priority boarding, early check-ins, and late checkouts at hotels. 

select best credit card

If a person shops from a specific retailer, they should select the credit card from them. This would help them in maximizing rewards from the chain of these retailers. This can also help them with other benefits like free shipping, extended returns, or exclusive access to discounts. Read more to know the best credit cards from retailers.

Identify your credit score to select best credit card

It’s good to start from the basics, what is your current credit score? Members may want to build their credit or they may look to select one of the best credit cards to build their credit score. Read on to know more about improving your credit card score here. 

Students may opt for Student credit cards. These are specially designed for students registered in a US university or school.

Top rewards cards or some of the premium credit cards require a high or excellent FICO score. It is best to apply for these credit cards only when you have a such high credit score. They easily reject people with a fair or average credit score.

Card members should monitor their credit scores regularly. They can either get a free credit score from their credit card. Or they may access free reports once a year from all three credit rating agencies viz. Experian, Equifax, and TransUnion. They can also access free credit score copies from AnnualCreditReport.com. This is a federal government-controlled site that provides consumers with access to a free copy of their credit reports each year. The reports are available from all three credit bureaus.

What is your typical credit card use?

The market is full of all sorts of credit cards. Always select the credit card which helps you in the best possible way. The card should add value to the user and should help with their financial goals. Adding a credit card should not add worries. Also, it should not increase your debt levels.

Students or credit-building adults

Students or credit-building adults could opt for secured credit cards. These credit cards take a security deposit and provide a credit limit. The credit limit is equal to the security deposit. Once you start paying back for the payments, the bank will report the payments to the credit bureaus. This will help in building the credit score of the member.

Everyday purchases

Rewards credit cards are best for everyday purchases. These everyday purchases may include groceries, gas, utility payments, streaming services, internet, and other online or in-store shopping. Reward cards offering cash back either directly in form of statement credits or points are best bets for such purchases. Rewards credit cards should always be the primary card to maximize rewards and value.

Balance transfer or 0% APR credit cards

Cardmembers with a balance on their credit card can look to opt for balance transfer credit cards. These credit cards provide better APR and lower interest outgo. Similarly, 0% APR credit cards offer introductory offers on new purchases or balance transfers. They could be excellent instruments to reduce overall interest outgoing by taking advantage of intro offers. 

many credit cards

How much does this credit card cost me in fees?

Credit card charges a number of fees. For instance, annual fees, balance transfer fees, APR on outstanding balances, and late payment charges. They may also charge access fees for using certain services. Normally, credit cards also charge international transaction charges. These are currency conversion charges for using the card outside the USA. 

Users should be aware of various fees applicable to their cards before applying for the same. Check the credit card issuer’s website to know the applicable fees. Also, check the rewards offered by the credit card. Some rewards are introductory and available one-off. Don’t be lured by such one-off rewards. Look for the overall value offered by the credit card. 

What are the signs to avoid a credit card?

Sometimes not doing something is better than taking the step. Do not apply for a credit card and look for the following signs.

Accepting a credit card because your friend has recommended it. No harm in taking advice from a loved one. But do your own due diligence. Your financial situation, goals, and paying capacity might not be the same. Applying for a credit card with a $400 annual fee doesn’t make sense. The prime feature of the card may be access to Golf courses. Unless you play golf or visit golf courses doesn’t make sense for you. 

If you already have several credit cards. Do not add more credit cards. Close the existing credit accounts before opening a new one. Credit card companies take a negative view to too many credit cards. They consider sucha  person at ta risk of default. Also, utlize the limit of your credit cards judiciously. Keep the utilization ratio of the credit cards to below 30%. 

Have you got the shiny new card? What Next?

Once you have got a credit card in your hand, always enable the SMS or app notification of the credit card provider. This will ensure that you are using your card safely and you get notification is any unauthorized charge is made on the card. 

Always pay the balances on time and in full. Monitor the credit report periodically, for any change. A healthy financial life is important to keep up your mental health. 

Personal Finance

How many credit cards are too many to have in 2023?

Credit card is one of the great inventions of the financial industry. They are a convenient way to pay bills or products like groceries, dining out, and buy things over the internet. If a person has too many credit cards, it can quickly become overwhelming. They can push a user into a debt trap by missing payments.

So, how many credit cards should a person have? This is not a simple question, it depends on factors such as income, spending habits, and overall financial situation. Ideally, users should keep a primary credit card for most of their expenses. The ideal number of credit cards for an individual may vary from person. Usually, a good rule of thumb is to have no more than three to six credit cards. This number of cards, helps a user to enjoy the benefits they offer. They are not bogged down by too many bills or worrying about very high credit card balances.

Another major benefit of having a few credit cards is that it can help a user to build a good credit score. It can show that a user is financially responsible.

On the other hand, having a few credit cards can help a user to optimize their rewards. For example, you may have one credit card that offers the best rewards for groceries or streaming services, another for travel, and another for everyday purchases.

many credit cards
Credit cards

It’s very important to choose cards that fit a user’s spending criteria. For example, if a user carries a balance on their credit cards, look for a card with a low APR. On the other hand, if they are looking to earn rewards, consider a credit card that offers cash back or travel points. 

Choose the credit cards by evaluating your spending habits?

If a card member has a stable income and is financially fine, they can easily pay a monthly card balance, having a few credit cards may be smart. They can You could use certain cards for daily purchases, like gas or groceries, to help you budget and potentially save money.

Many credit cards offer incentives for rewards, travel, or cash back. Loyalty-program credit cards from retail stores often offer points toward purchases or extra discounts.

If a user is just starting out in college or a career, opening just one credit card might be a good option. They can use it to pay bills from a single source, making it easier to track payments. In the meantime, they can accumulate a solid credit history by paying the card on time and keeping it open.

many credit cards
Students

Build the Credit Score without having many credit cards

Contrary to popular belief, if card members have a few credit cards, it can help them build a good credit score. These credit cards on their records can show the banks, credit card companies, and credit bureaus that they are financially responsible. These credit cards would help prove that a card member has a stable income. Making payments on time improves or builds the credit score over time. 

A high credit score can make it easier for a user to get loans and mortgages in the future. A good credit score also helps reduce the rate the credit card companies charge to the user. The better the credit score, the lower the APR being charged to a loan account.

Though, it’s important to use these credit cards responsibly in order to build a good credit score. This means paying bills on time, keeping credit card balances low, and avoiding maxing out credit cards. It’s also a good idea to regularly check your credit score and credit report to ensure that the credit information is accurate and up-to-date.

Optimizing Rewards with the Right Credit Cards

Card members can earn the maximum rewards for each transaction if they have the right credit card. Having co-branded credit cards also helps a user to optimize rewards. 

If a card member frequently shops for groceries from a retailer. They should consider getting a credit card that offers the best rewards for retailers. This can help them earn more rewards for these everyday expenses.

On the other hand, if a user travels for work or for leisure, they should opt for a credit card that offers travel rewards. The best travel credit cards can help a user earn rewards in the form of miles or hotel points. The card members can then redeem these miles or points on their future travels to earn free flights or hotel rooms.

If a user, uses a credit card for a variety of purchases, they should get a rewards credit card. 

many credit cards
Reward credit cards

Card members can optimize their rewards but they have to choose the right credit cards. This can also help the users get the most value from their credit cards. 

Maintaining a Good Credit Score with Responsible Use

Finally, if a customer uses their credit cards responsibly it can help them maintain a good credit score. They have to follow some of the best practices below Here are some tips to help you use your credit cards in a responsible manner:

They should pay their bills on time. Late payments can negatively impact their credit score. Credit cards report to the credit bureaus for late payments or any high charges on the credit card. Always, be sure to pay your credit card bills on time every month.

Credit card members should keep their credit card balances low. High credit card balances can also hurt their credit score. They should always try to keep their balances low. A good rule of thumb is to keep the credit card balances below 30% of the approved credit limit.

Next, users should avoid maxing out their credit cards. Max out credit cards can also harm the credit score. Always try to keep the balances below the credit limit. Card members should also check their credit scores periodically. They can visit Annualcreditreport.com to check for their free credit report.

In conclusion, it is a good practice to keep the number of credit cards to three to five. Too many credit cards can be disastrous. They can overwhelm a user. Always keep your income and financial needs before getting a credit card.

Personal Finance

How to benefit from Credit cards for everyday purchases?

Using a credit card for everyday purchases provides convenience as well as rewards. They offer flexibility and security in usage. They also offer a chance to build credit. Credit cards can help in a short-term money crunch.

First of all, it’s convenient. You don’t have to carry around a lot of cash or write out checks. Further, you can use your credit card at most stores and online. Additionally, if your card is lost or stolen, you can easily cancel it and get a new one, unlike with cash.

There is a famous video clip doing rounds on YouTube. In this clip, refer to below the basketball player Shaq O’Neil. He reveals his story of a $10,000 purchase in a Walmart using a credit card. Surprisingly, that was the largest one-time purchase done by anyone in Walmart. This is an extreme case where the athlete bought several laptops, LED television, and other expensive gear for his new apartment. An average user spends a little over $120 on an average visit to a grocery or a convenience store. 

Advantages of using a credit card for everyday purchases

Below are some of the advantages the users can get by using credit cards for everyday purchases of groceries or gas:

1. Convenience 

Firstly, credit cards are a convenient way to pay for purchases. Customers do not need to carry cash with them and then can easily pay for items online or in-store. There is also less risk of theft or money being lost. Cards also provide the customer advantage of not carrying exact change in their pocket every time they walk into a store. Look out for the Best Practices to use your credit card.

2. Rewards and benefits

Many credit cards offer rewards and benefits for using them for everyday purchases. These rewards can include cash back, points, and miles. As well as, other perks such as extended warranty protection or purchase protection. These rewards can provide benefits such as statement credits, merchandise, or travel.

Further, retailers offer extra benefits on co-branded cards. These benefits can include free or expedited deliveries, free coupons or other time-bound offers on credit cards. These co-branded credit cards are very good if you frequent a particular retailer. So, by using their credit card for everyday purchases, customers can earn rewards that they can use later on.

3. Purchase Protection

Credit cards offer a secure way to pay for purchases. Card members can easily cancel their card in the event that a card is lost or stolen. Customers can easily replace plastic cards. Several credit cards offer purchase protection, which provides coverage for eligible items. This is a sort of insurance program. Any item lost, stolen, or damaged is replaced within a certain time period after purchase.

4. Building credit

Using a credit card responsibly can help a customer build a good credit score. This can be beneficial when applying for loans as well as other financial products in the future. Customers should use their credit cards regularly for everyday purchases. They need to pay off the balance in full each month. This will help them build a consistent payment history. These consistent payments help in improving the credit score. Credit bureaus consider the timely payment as a factor when calculating credit scores.

Small purchases made on credit cards help build your credibility with lenders. Financially responsible customer uses their cards to make small purchases. They do not use credit cards for large purchases. Large purchases are usually done in check or other digital forms of payment. At last, it tells the lender that they are a financially responsible customer.

5. Flexibility

Credit cards offer flexibility in terms of payment options. Customers can pay off their entire balance each month or carry a balance and make monthly payments. This flexibility of carrying a balance can help card members

6. Interest-free financing

Credit cards offer an interest-free grace period on new purchases. They allow you to pay off your balance in full each month without incurring interest charges. In this case, if a card member pays their balance in full each month, they won’t have to pay any interest on their purchases. Evidently, this can save them money. This provides them with interest-free financing. This advantage is available in using a credit card in contrast to using a debit card or cash.

What are the downsides of using Credit Cards for everyday purchases?

1. Interest charges:

Firstly, credit cards apply interest charges on any unpaid balance. Expect to pay extra if there is any balance outstanding on your credit card. These interest charges can add up over time and increase the total cost of your purchases. Credit cards carry exorbitant interest charges on the outstanding amount. APR for credit cards ranges from 14% – 30%.

2. Credit score

Secondly, using credit cards for everyday purchases can affect your credit score. Carrying a high balance on your credit cards increases your credit utilization ratio. This is a factor that credit bureaus consider when calculating your credit score. A high credit utilization ratio can lower your credit score.

3. Credit card Fees

Credit cards charge fees for various services. For example, annual fees, balance transfer fees, or late payment fees. These fees can add to the cost of using credit cards for everyday purchases. Some credit cards may add fees on payments of some particular payments. These could include payments to Utilities, insurance, and government services.

4. Debt

Credit Card debts are the most expensive debt in the market. Lenders charge as high as 2 – 4% per month interest on any payment not made within the payment period. They also levy one-time late fee charges as well on any outstanding payments.

everyday purchases
Credit Card debt

For a cautious user, credit cards are a very fine financial instrument. They offer rewards and free credit if you are a financially prudent and responsible user. In the hands of a spender, the credit cards in a Walmart can convert into a debt trap. Unlike Shaq O’Neil in the example, I wrote above. A normal user would spend a few hundred dollars on a typical day-to-day visit to a grocery store. Are you tired of your credit card debt? Look for our guide to managing your credit card debt.

Credit cards for everyday purchases

Finally, using your credit card for everyday purchases can offer convenience, rewards, interest-free financing, and purchase protection. However, it’s important to use your credit card responsibly. Avoid carrying a high balance on your card to avoid interest charges. Maintain financial prudence and avoid negative impacts on your credit score.

Personal Finance

7 Smart ways to improve credit score in 2023

If you’re looking to improve credit score, using credit cards responsibly can be a smart way to do it. By following a few simple tips and tricks, you can use your credit cards to boost your credit score. We’ll share some ways to improve your credit score using credit cards. By following these tips, you can improve your credit score and increase your chances of getting approved for loans in the future. So let’s dive in and take a closer look at how you can use your credit cards to improve your credit score.

1. Always pay your bills on time

This is the most important factor in determining your credit score. Make sure to pay all your bills on time and every time. Payment history is a key factor in determining your credit score. Paying your credit card bills on time helps improve your credit score. Late payments have a negative impact on your credit score. By paying their bills on time, a user shows that they are financially responsible. This habit help in building and improving their credit score. Additionally, paying your bills on time can help you avoid late fees and other penalties.

2. Keep credit card balances low

Secondly, never utilize the full credit available on your credit card. Utilizing only a part of the limit of credit card balances helps improve credit scores. It shows that a user is able to manage their credit and avoid high levels of debt. When the credit card balances are low, it indicates to lenders that a user is not overleveraged. They are financially responsible and hence have low credit default risk.  

Credit cards are unsecured debts and carry a high risk for lenders. High credit card balances are a red flag to lenders. Risk algorithms flag users who have high balance utilizations. They are risky as they are too dependent on credit card debts.

Having low credit card balances can help improve your credit utilization ratio. This ratio is another key factor in determining your credit score. This ratio measures the amount of credit you are using relative to your credit limit, and a low ratio can help improve your credit score. High balances on your credit cards can hurt your credit score, so try to keep your balances below 30% of your credit limit.

3. Limit the number of credit cards and loan accounts

Each time you apply for a new credit card, it can ding your credit score. Try to limit the number of credit card applications you make.

Having too many credit cards can hurt your credit score in a few different ways. First, having a high number of credit cards can increase your credit utilization. This can be damaging to your credit score because it is a major factor in your credit score. High credit utilization can show to lenders that you’re using too much of your available credit.

Additionally, having too many credit cards can also make it more difficult to manage your payments and keep track of your spending. If you have a lot of credit cards, it can be easy to miss a payment or make a late payment, which can also harm your credit score.

Finally, having too many credit cards can also be a red flag to lenders, who may see it as a sign that you’re not able to manage your finances. This can make it more difficult for you to get approved for new credit or loans, and can even lead to higher interest rates on the credit that you do have.

Be mindful of the number of credit cards you carry. Use credit cards responsibly and maintain a healthy credit score.

4. Check your credit report

Make sure to check your credit report regularly for errors and disputed items. Users can request one free credit report per year from each of the major credit bureaus.

Checking the credit report allows a user to identify any errors or potential fraud. By reviewing the credit report, a user can ensure that the information is accurate and up-to-date. If there are any errors or fraudulent activity, flag it to the credit bureau. A credit bureau may not take any step on a report unless someone tells them of any fraud. Managing the credit report is an individual responsibility. Improve your credit score, to avail favorable credit terms when you apply for a mortgage. Reviewing the credit report can help identify any areas where you need to improve to boost your credit score.

Reviewing credit reports provides you with information on any old credit accounts. It also informs of the Credit utilization ratio and any unpaid credits in your name.

5. Avoid maxing out credit cards

Maxing out your credit cards can have a negative impact on your credit score. It’s best to keep your balances as low as possible. Try and keep your usage of credit cards to 30% of the total limit on your credit cards.

Maxing out one’s credit cards is a sure sign of credit distress. This can impact your credit score because it shows that you may be struggling to manage your finances. It also indicates to lenders that you may be at risk of defaulting on your payments. This can decrease lenders’ confidence in your ability to repay future loans or credit, which can result in a lower credit score.

6. Open new credit card accounts only when you need them

Opening new credit accounts can hurt your credit score, so it’s best to only open new accounts when you really need them. Applying for many credit cards in a short period of time can also hurt your credit score. Each time you apply for a credit card, the issuer will perform a hard inquiry on your credit report, which can lower your credit score. This might revert to default in the long run.

7. Be patient to improve credit score

Improving your credit score takes time, so be patient and continue to manage your credit. Once a credit profile turns negative due to any reason, it takes financial prudence for it to turn positive. Also paying a big chunk of money once won’t improve the credit profile overnight.

Consistency is the key to improving your credit score profile. The risk algorithms by lenders and credit agencies reward small payments.  It will pay off in the long run.

Use your credit card smartly to extend free credit. Do not be a slave to your credit card or fall into a debt trap. The USA has the highest per capita credit card debt. Find our article on ways to manage the debt on your credit card.

Personal Finance

Virtual Credit Cards – A Complete Guide to empower beginners

A virtual credit card is a number generated by a credit card company, that is not tied to a physical credit card. A credit card company or bank issues virtual credit cards. They are available for online transactions, such as making purchases on eCommerce websites. Users can pay bills through these cards on online apps and websites.

As there is no physical card, a virtual credit card is safe. There is no risk of card skimming or duplication. A user can’t do physical swiping of a virtual credit card. This makes it a good option for security-concerned individuals. It helps to protect personal financial information.

Features of a virtual credit card

They do not have a physical card like a normal bank credit card. They have everything like a normal credit card like CVV, valid through date and name. Major companies such as Visa, MasterCard, or American Express issue virtual credit cards.

virtual credit card
Visa Virtual Card

Virtual Credit Cards are good for increasing the security posture of a user. They are useful if you shop online or if you are using any apps which do not appear to be of top-notch security. A lot of services also ask for credit card details to verify a user’s identity through a credit card. In place, of providing their original credit card details a user can opt to use a virtual credit card. Further, this can help to mask real credit card details.

Identity protection in Virtual Credit Cards

A virtual credit card can help protect your identity. They provide an additional layer of security for your personal financial information. Since a virtual credit card is not tied to a physical credit card, it cannot be stolen or used in a physical transaction. It is difficult for a potential thief to use your credit card information to make unauthorized purchases or access your accounts. Virtual credit cards do not offer too many rewards. If you are looking for a rewards credit card, do look for our guide.

Security features in virtual credit cards

Many virtual credit cards offer security features that can help protect a user’s identity. These include the ability to generate a new virtual credit card number for each transaction. This means that even if a thief is able to access your information, they will not be able to use it since the number will no longer be valid. Using a virtual credit card can help reduce the risk of stolen identity. While it’s not a foolproof solution, it can provide an extra layer of protection for your personal financial information.

What are the advantages of using Virtual Credit Cards?

These cards are good for certain use cases wherein a user doesn’t want to divulge their credit information. Some of the use cases of virtual trade cards are as follows:

Fraud protection in virtual credit cards

If you do not trust a particular website or if it looks a bit sketchy it’s good to not use your real credit card. Apply for a  virtual credit card and use it to process any payment transaction on these websites. As your credit card details are not exposed online you can save yourself from any fraudulent use.

Recurring payments

A lot of websites offer recurring monthly payment options. You may end up paying for services whether you use them or not. A $10 service may appear to be a bargain but if you add up too many subscriptions this may be a drag on your budget. Subscription services are easy to set up. But when the user wants to cancel the subscription, the process may be through hoops. A user may have to call up a number and wait to speak to an agent to go through the cancellation request. Virtual Credit cards can be a savior here. If you are not sure that you want to use the service for a long time, it is a good idea to use a virtual credit card. You can block any future transactions or use the service for a month and forget about any repayment.

virtual credit cards
Online Shopping

Identity Theft

Impersonators and bad actors set up websites to collect the credit history of novice users. These bad actors may use the credit card details and other personal details available to impersonate a person on social media. They may also get a complete credit history of the person from the credit bureaus. These bad actors can further misuse credit information to take a loan or mortgage in the name of the victim. To prevent yourself from this agony, we recommend using a virtual credit card as much as possible in your web use.

Data leakage

With the advent of the cloud, all our financial information is now available online on cloud servers. More and more companies put their data in the cloud. This data is only as secure as the company that is securing it. Hackers target less secure websites, and apps. They gain access to user details, stored credit cards, and other personal data. They sell this financial information over the dark web to other hackers or bad actors. For the safety of your own data, it is advisable to opt for virtual credit cards for less secure websites. Even popular websites have fallen to data leakage in the past from hackers.

Are Virtual Credit Cards Safe?

In conclusion, any financial instrument is only as safe as the safety habit put in place by a user of the service or product. Virtual Credit cards provide another layer of safety that the product offers limited downside.

Of course, it’s important to keep in mind that no method of payment is completely foolproof. It’s always a good idea to take steps to protect your personal financial information. Always use strong, unique passwords for your online accounts. Avoid sharing your credit card information. Finally, make it a habit to check your credit card statements for unauthorized charges.

What is the downside of using Virtual Credit Cards?

There are a few potential disadvantages to using a virtual credit card. One potential disadvantage is that not all merchants accept virtual credit cards. A user may not be able to use her virtual credit card to make purchases at certain stores or websites.

Some virtual credit cards may have fees associated with their use. For example, this could be a monthly or per-transaction fee. Virtual credit cards do not provide fraud protection as physical credit cards. In case of abuse, a user has to block their cards themselves.

While they do offer an added layer of security as compared to physical cards. There is still a risk that a thief could gain access to your virtual credit card number. Bad actors can use it to make unauthorized purchases.

While virtual credit cards are a useful tool, they are not without potential drawbacks. It’s always important to weigh the pros and cons before deciding if a virtual credit card is right for you. In the end, apply for a virtual credit card unless you have good use of a virtual credit card.

Where can I get a Virtual Credit Card?

Usually, banks, Credit Card issuers, and FinTechs offer Virtual Credit cards. To apply for a virtual credit card reach out to an issuer. Though, each company will have its own process for applying for the card. But in general, you can expect to fill out an online application. In the online world, if a Bank is asking to come to a branch for a virtual credit card, it should be a hard pass.

After submitting the application, the company will review it. They will determine if you are eligible for a virtual credit card. If they approved a user’s application they will generate a virtual credit card number. They will also provide the user with instructions on how to use it.

Customers can access their virtual credit cards through the company’s mobile app. Some virtual credit cards may have fees associated with their use. Finally, always read the fine print before applying for all financial products. So that tomorrow you are not surprised by the charges.

Personal Finance

7 Tips to manage credit card debt in 2023

Credit card debts are increasing year by year and by the third quarter of 2022, Americans hold $925 billion in credit card debt. More and more people are not able to manage credit card debt. Credit card balances saw a $38 billion increase since the second quarter. As per the latest Quarterly household debt and credit report by the Federal Reserve Bank of New York, there is an increase in credit cards outstanding. This jump of 15% year over year is the highest in the last 20 years.

Numerous studies show that shoppers with credit cards are willing to spend more on items. They check out with bigger baskets and focus on and remember more product benefits rather than costs. But what about when paying electronically or with cash? Credit card debts are some of the most expensive forms of debt. Those advantages of credit cards also help build large debts on the credit cards. 

A lot of people in the USA have a credit card debt problem. On average, a consumer has a debt of $5000 on their existing credit cards. We are making Big Banks happy and prosperous by paying hard-earned money in interest charges and penalty fees. Credit Card interest rates are also on the rise and currently at the end of 2022 average interest rates have reached 20.1% as opposed to 18.32% at the start of 2022.

1. Manage credit card debt – Make a budget

The first step in managing and paying off credit card debt is to create a budget. This budget should outline your income, expenses, and savings. This will help you identify how much money you have available to put toward your credit card debt each month. 

Always make a realistic budget that you can stick to. Your monthly budget should have some spare which should go for paying off the credit card debt. You do not need fancy tools or subscriptions to make budgets. It’s easy to do it in a journal or diary if you are a bit old school like me. If you have Microsoft Excel, it comes pre-loaded with lots of templates. A first-level easy-to-use template can be accessed from the home screen itself.

2. Prioritize your debts

Once you have a budget, your credit card debts should be the first priority. Start by paying off the credit card with the highest interest rate first, as this will save you the most money in the long run. Credit Cards debts also affect your credit score badly as most of these card debts are unsecured. 

Debt is in our mind

Different people work on different stimuli if you have multiple credit card debts. You can look to cut the debt of a credit card first, and then move to the next credit card. This is termed the snowball effect. Reaching the first milestone and moving to the next gives a feeling of fulfillment to the user.

3. Consolidate your debts

If you have more than one credit card debt with a high-interest rate. It is a good idea to consider consolidating your debts into one credit card with a lower interest rate. This can make your monthly payments more manageable and save you money on interest charges. 

Another good idea is to refinance this credit card loan to take a Personal or Business Loan from a lender with a manageable interest rate and pay the credit card debts off it. High-Interest credit card rates should always be paid first. 

Customers can also look to Balance transfer their credit card debts to a low-interest loan or credit card. Consolidation of debts in a single place can help a user manage the debt effectively. 

4. Set up automatic payments 

This is a no-brainer if the payments are automatically debited from your account. To avoid late payments and incurring late fees, set up automatic payments for your credit card debts. This will ensure that your payments are made on time each month and help you avoid missed payments.

5. Avoid using your credit cards

 While you are working to pay off your credit card debt, avoid using your credit cards for new purchases. This will prevent you from adding to your existing debt and make it easier to pay off your balances. Look to cut down on your credit cards as the next best measure. That shiny credit card in your wallet which gives you access to international lounges may add to your debt woes. 

6. Increase your Income:

This is most obvious but if you are in a lot of credit card debt, raising your income level will not hurt. Work towards a plan to increase your income so that you can get rid of debt. Further, this additional income can be in the form of extra shifts at your existing job or selling things you do not need on eBay or Craigslist or even in a garage sale. Make use of any talent you may have. Give a few guitar classes or yoga lessons to others. Social Media and influencer culture have made common folks celebrities. Make use of it to earn some dollars. In the end, use that extra money to pay off your debt.

7. Take outside help from a 3rd party

It is good sometime to take guidance and help from experts. There are financial experts and planners who can help you plan your overall budget and finances. These experts for a small fee can help organize your debts, help sort out what should be your priority, and provide guidance on an easy payment mechanism. 

These tips may help you to ease some of your credit card pain.

Finally, there is no silver bullet to vaporize the debt altogether. It depends on how financially prudent a consumer is to get the debt under control. To conclude, one strategy might not be enough for you and may look to adopt multiple strategies to reduce your debt. 

Personal Finance

5 Best Practices to use Credit Cards in 2023

Credit cards are definitely one of the wonders of the Financial world. They let you use free money for a period of 30 days and then a further 15-28 days to pay the bill. So a member gets at most 45 days to pay up their bills using their credit cards. In this article, we will take you through some of the best practices to use credit cards.

There are advantages of a credit card but there is a big downside to this free credit period. Credit card companies charge huge fees and interest on late payments and interest. Credit Card companies charge some of the most prohibitive interest rates. For example, some credit cards charge in the range of 2.5% to 4.5% per month of the outstanding amount.

1. Always pay your bill in full and on time

Ensure to pay your credit card bills on time and always in full. This is the surest way to ensure a good credit score and also keep your finances healthy. Paying the least amount due and rolling over credit looks good. The punishing interests and penalties will eat into your hard-earned savings. Think of interest charges on credit cards as negative balances. It eats into your savings and earnings.

If a card member misses payments, they could end up paying penalties of hundreds of dollars. Also, the interest charged can very well run up to thousands of dollars. These are unnecessary payments you can avoid by paying bills on time. Another negative impact of missing timely bill payments is the hit on the credit score of a user. This will further affect the future loans or mortgage requirements of the member.

As a good practice automate the card payment. This will remove the hassle and you will pay in full to the Credit Card Company near the payment due date. This will prevent any accidental oversight. Also, it will prevent any delay in payments and avoid late penalty charges. Credit cards have different billing and payment cycles. It is difficult to remember payment dates if you have many cards.

2. Keep tracking your Monthly Statements

Always keep track of your monthly statements to detect any anomaly in the statement. There might be any fraud activity or extra fees which may go under. Also, be careful of interest rates or charges that the credit card company might be charging you. Setting up notifications on your phone or a credit card app on your phone will help you keep a tab on the spending on the card.

Billing errors though very rare can creep into the card statement. A few minutes spent going through the card statements may help you later with heartburn.

Credit Card companies also offer fraud prevention. The minute a user reports fraud, they can relax as any transaction is the company’s responsibility. So as soon as you reach out to the company, they can help you take care of any fraudulent activity on your card.

3. Stay well below the credit limits of the credit cards

To improve your credit score do not use your credit limit. Try to keep your monthly spending below 30% of your total credit card limits. “Credit Utilization” is the term for this credit card. This reports how much of the available credit is a customer actually using. Lower credit utilization is more financially responsible for a user.

Running through an example, if you have 2 credit cards with a total $20,000 limit on both cards. 30% of the same works out to be $6,000. So keeping your total spend of a month below $6,000 will not affect your credit score. It is always a good idea to be a responsible spender and not go overboard with the limit. An extra payment will help improve the score and bring you back within the limit.

4. Best practices to use credit cards and know your Credit Card

Few card members are aware of the features or the fees on their cards. Users usually buy a credit card from a card sales guy or a recommendation from a friend or family member. Knowing your own credit card can help you detail out the fees, penalties, or charges. Usually, these details are available on the credit card website or their app.

Look out for some of the below charges or fees applicable to your card as the same may impact you as a user.

i. Annual Fees

Firstly, always try and opt for credit cards with no annual fees. The cards which annual levy fees usually offer much more rewards and value. Always, take a stalk if the extra fee is worth the extra benefit the card is offering. Unless you are getting 3 times the rewards from a credit card’s annual fees, there is no point in paying the same. A $1000 annual membership card may offer a golf membership but if you aren’t a golf player the fees are not worth it.

Chase Freedom Unlimited Credit Card

ii. Balance Transfer Fee

Secondly, look for the balance transfer fees. This fee refers to transferring your credit card debt to another provider. Companies charge a fee of 3-5% of the outstanding amount as a one-time fee for a balance transfer. Do check what your credit card is offering you for this service.

iii. Foreign Transaction Fees

Credit Cards may charge exorbitant fees on foreign transactions. Always check the currency display on any eCommerce site so that you are paying in USD. If you are a frequent traveler, choosing a specific card that offers better Foreign Transaction charges makes sense. In spite of additional cost, a credit card with zero foreign transaction fees may come out beneficial for frequent travelers.

iv. Late Payment Charges

Credit cards also levy fees for late payment charges. These Late payment fees can start from $30 and can be high as $250. If we look at some of the popular credit cards like Chase Ultimate Rewards Card, which charges a $40 late payment fee. This is an unnecessary penalty for skipping a payment. The best way is to automate the payment and this takes care of any missed payments.

v. Interest Charges

Lastly, always pay attention to the interest rate charges applicable to your credit cards. Credit cards are notorious for their high-interest charges. Banks collect billions of dollars in profit each year by charging this interest. The Interest is known as the Annual Percentage Rate (APR). If we see the details of the American Express Gold card. The card charges an APR of 20.24% to 27.24% based on the creditworthiness of the card members.

best practices to use credit cards
American Express Gold Credit Card

5. Manage the emotional triggers which make you spend

We all falter sometimes with our credit card payments. Obviously, late payments and interest charges are the facts of life. Be responsible, and keep yourself away from triggers that turn into a spending spree. Fast fashion and easy access have made shoppers fall into the spending spree.

Finally, control your surrounding environment. If you are somebody who gets scared of spending cash. Do the same. Don’t use cards, use cash. You may lose on some rewards but would be happy and financially healthy. Identify your own trigger and own your mistakes.

Some credit card companies increase your credit limit if you pay your bill on time or you are holding the card for some time. These credit limits are usually set up with the consent of the card members. Having too broad or large limits may do more harm to you than helping you in your time of need. You may ultimately, fall into an overdrive of spending or into a debt trap.

The best practices to use credit cards are built over time

In conclusion, remember it takes time to build new habits. But today is a good day to start. Keeping a close watch on your credit statement, paying bills on time, and an emotional check on spending triggers can help you use your credit cards. Enjoy the advantages the 21st-century money is providing without the downside.