Credit Card Tips and Advice – Nationwide (2024)

FAQs

What is the best financial advice on credit cards? ›

The best way to use a credit card is to avoid paying interest by paying off the balance every month on time. Interest rates, known with credit cards as annual percentage rates, apply to purchases, cash advances and balance transfers for most credit cards.

Use credit wisely - follow the 20/10 rule

Keep your monthly debt payments to less than 10% of your monthly after-tax income. Keep track of your purchases and don't buy expensive and unnecessary impulse items.

Pay your balance every month

Paying the balance in full has great benefits. If you wait to pay the balance or only make the minimum payment it accrues interest. If you let this continue it can potentially get out of hand and lead to debt. Missing a payment can not only accrue interest but hurt your credit score.

Many card issuers have criteria for who can qualify for new accounts, but Chase is perhaps the most strict. Chase's 5/24 rule means that you can't be approved for most Chase cards if you've opened five or more personal credit cards (from any card issuer) within the past 24 months.

One of the biggest issues with credit cards is that they often come with high interest rates. If you don't pay off your balance in full each month, you could end up paying a lot more than you originally spent due to the interest charges.

The golden rule of credit card usage is to do everything you can to pay off your entire balance each month. If you can do this, you won't be charged any interest.

What is the 50 30 20 rule for credit cards? ›

Our 50/30/20 calculator divides your take-home income into suggested spending in three categories: 50% of net pay for needs, 30% for wants and 20% for savings and debt repayment. Find out how this budgeting approach applies to your money.

Your credit card company cannot increase your rate for the first 12 months after you open an account. There are some exceptions: If your card has a variable interest rate tied to an index; your rate can go up whenever the index goes up.

Not paying on time

Sometimes, schedules are busy and budgets are tight. But it's best to always pay at least part of your credit card bill on time. Missing or late credit card payments can have a big impact on your credit score and fees.

By paying your debt shortly after it's charged, you can help prevent your credit utilization rate from rising above the preferred 30% mark and improve your chances of increasing your credit scores. Paying early can also help you avoid late fees and additional interest charges on any balance you would otherwise carry.

Most of your payment will go to paying interest. Since credit cards carry high interest rates, it can take a long time to pay off debt when only making the minimum payment. If you miss a credit card payment, then the bank can charge you interest on top of the original payment owed.

So, the higher your credit limit, the better your chances are for lowering your credit utilization ratio, which should ideally be around 30% or lower. Credit limits can also help indicate how much a lender finds you responsible for making back your payments.

Financial advisors can also offer advice and guidance on how to manage and pay off different types of debt, including credit cards, student loans or a mortgage.

Good credit counselors spend time discussing your entire financial situation with you before coming up with a personalized plan to solve your money problems.