Hi everyone,
I’ve been trying to get better at understanding how credit cards actually work beyond just spending and paying them off each month.
For people who’ve been using them for a while, what’s something you wish you knew earlier? Could be anything like rewards, interest, credit scores, or just general mistakes to avoid.
I’m just trying to learn and avoid doing things the wrong way.
Thanks in advance for any advice.
What’s something you wish you knew earlier about credit cards?
byu/kevsavesuk inCreditCards
Posted by kevsavesuk
3 Comments
How situationally dependent Team Travel can be. I got some great cards, but when it came down to it, I simply don’t have the travel style that lends itself to getting great deals. Now I’m stuck with trying to transfer to Team Cash Back with high levels of inquiries and new accounts.
Utilization ratio was a game changer for me. I used to think as long as I paid off the full balance each month I was golden, but turns out keeping your utilization under 30% (ideally under 10%) makes a huge difference for your credit score. Even if you pay it off completely, if your statement closes with high utilization, it still dings your score temporarily.
Also learned the hard way that closing old cards can actually hurt you – length of credit history matters more than I realized. I closed my first card thinking I was being responsible and my score dropped like 40 points. Now I just throw a small recurring charge on old cards and set them to autopay so they stay active. Credit building is weirdly counterintuitive sometimes.
The most fundamental stuff you should do is:
Set up autopay for the statement balance by the due date (even if you want to pay before autopay does, most autopay systems are smart enough to adjust by the amount of the last payment)
Turn on all manner of notifications, including ones for transactions 1 cent and over and ones for statements
Add the card to your mobile wallet (Apple Pay/Google Pay) and strongly preference using that first wherever you can, use contactless with the physical card if that’s not an option, insert chip if forced to, never swipe unless you have truly no other choice to pay
If your card supports virtual card numbers, preference those for online payment portals that don’t support Apple Pay/Google Pay/PayPal etc.
Redeem cash back for a statement credit or direct deposit at least once per month, or set up auto-redeem if your card supports it. Exception is if the card earns travel points that are worth accumulating. Credit card rewards are fully uninsured, do not earn interest, devalue with time, and can be voided by the issuer at will in 49 of 50 US states
Let your balances actually report and generate a bill instead of paying down the card with every single transaction. Pay like a utility bill; you don’t pay your utility provider every time you turn on the faucet, you wait for the statement to arrive and pay it in full by the due date, often just have it on autopay.
Avoid credit cycling, your credit limit is the maximum amount that your bank trusts you with in a month, instead just work up your credit limits over time
Some less fundamental but good stuff:
Read through the protection policies your card offers like extended warranty, auto rental insurance, purchase protection, etc.
If your card supports merchant offers, look through those once in a while and activate as many as you can
Credit card travel portals are generally less favorable than booking direct, but if you find a good deal it’s usually better to pay from the card itself and then redeem points as a statement credit than it is to pay with points. Paying with points forfeits the multipliers that are supposed to make booking via the portal worthwhile in the first place