Reddit is a forum site where you can find pretty much everything, from cats ruthlessly knocking over small children to personal finance advice. While the former is always entertaining, the money tips on Reddit are also worth checking out. If you're new to credit cards or trying to get more value out of them, here are several great pieces of credit card advice courtesy of Reddit.
Start with a no annual fee credit card
The r/creditcards subreddit provides helpful advice about starter credit cards in its guide to the basics. Most importantly, it recommends getting a no annual fee card as your first credit card. That way, you can keep the card open long term without paying a yearly maintenance fee. The age of your credit accounts is one factor in your credit score, so it helps if your oldest card stays open.
Treat your credit card like a debit card
This is some of the most common, and most upvoted, credit card advice on Reddit. Use your credit card like you would your debit card. If you couldn't afford a purchase using the money in your bank account, don't put it on your credit card.
Overspending with credit cards is a huge issue, as evidenced by the $5,000 on average in credit card debt held by Americans. One way consumers get into trouble with credit cards is by making purchases they can't afford, because they know they won't need to pay those purchases back right away. This habit could leave you unable to pay your credit card bill later, which is why you're better off avoiding it.
Always pay the full balance each month
Another popular tip on Reddit is to always pay your credit card's full balance. When you pay in full every month, it keeps you out of debt. The card issuer also won't charge you any credit card interest on your purchases. Most credit cards have high interest rates, which makes carrying a balance an expensive proposition.
While we're on this subject, it's also important to pay on time. Not only can this help boost your credit score, but it also ensures you avoid paying extra for late fees.
Don't use too much of your credit
When a card issuer approves you for a credit card, it will also approve you for a credit limit. That's the maximum amount you can spend on the card. But take it from Reddit -- stay far away from your card's credit limit.
A big chunk of your credit score depends on your credit utilization ratio. This ratio is your credit card balances compared to how much credit you have. Several Redditors recommend not using more than 30% of your credit limits, which is a common rule of thumb. Some suggest keeping it even lower, like only using up to 20% of your credit. There's not a fixed number dividing "good" and "bad" credit utilization, but staying under 30% is generally good enough.
Review your monthly statement for fraudulent charges
Your credit card company will send you a statement every month with the transactions made on your card. You can also access your transaction history at any time in your online account.
Make sure to review these transactions at least once per month to confirm they're all legitimate. It may seem like simple advice, but some people neglect it. If there are any fraudulent transactions, it's important to catch them as soon as possible so you can dispute them and request a replacement card.
Open multiple credit cards
Consumers are often unsure of how many credit cards to have. While many prefer sticking with one card for simplicity's sake, it's actually better to have at least two credit cards. If one card is lost or stolen, you still have another you can use while waiting for a replacement.
You could also take advantage of more credit card perks with multiple cards. The best credit cards have a variety of different benefits, so when you're open to multiple cards, you can combine different ones with features you like. For example, if you have a card that earns bonus rewards on groceries and gas, you could also get one that earns extra on dining and entertainment.
Credit cards can be valuable, if you know how to use them. Reddit is a big help with this, especially since the best advice is normally voted to the top. Another way to learn the ins and outs is with The Ascent's beginner's guide to credit cards. After spending a little time on how credit cards work, you'll be ready to make the most of them.
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