If you have multiple credit cards, that will help you exponentially to build your credit. If you want to raise your credit, you need to be able to demonstrate that you’re having a good relationship with your credit history. In order to achieve that, you have to maintain your credit cards active and make the payments on time. If you struggle sometimes or you forget to pay your credit cards, we are going to suggest a solution to effectively manage your credit cards.
The better you manage your credit cards, the better your credit score will be. You will also have higher chances to qualify for a mortgage and it can also help you get excellent rates when it comes to applying for a mortgage.
Assuming you have a ton of credit cards, the very first thing you should do to manage them correctly is:
1. Create a list of your credit cards. That way, you will know how many cards you have in total and what use you are giving them.
2. The second point is to assign a use to each card. Whether you want to assign them for grocery shopping, to pay your cell phone bills or to pay your rent. You have to give your credit card a role.
3. The third step for you to do is to assign a new due date. You’re going to align all credit cards, so that way, they have all the same due date.
What is a due date? it’s just simply the day that you have to pay your credit card by. If the due date is on the 15th of every month, then you have to make the payment at the 15th of every month. If you have a due date at the 20th of every month, then you should make the payment of your credit card by the 20th of every month.
1. The fourth one, it’s scheduling auto payments or automatic payments. We’re talking about the scheduled or minimum payments.
How to effectively manage your Credit Cards: A new due date
For example, you have a Chase card. Let’s say you also have one from Bank of America, one from Wells Fargo, another one in the mix will be an Amex and you also have a Capital One Card.
Why do you need to assign a role, you might be wondering? It is very important for you to keep your card active. It doesn’t matter if you have a bunch of credit cards, if you’re not using them it’s just simple. If you don’t use it, you lose them. You have to assign an expense that you know it’s going to happen every single month.
The role that you’re going to assign to each and one of them, it’s going to be as follows: For Chase, you can use that to pay rent. For Bank of America, you can use that to pay your groceries. Wells Fargo could be your cell phone bill. Amex could be gas. Then Capital One can be your internet.
Then once you get that figured out, you’re just simply going to take the 1-800 number and just call the bank and ask them to change your due date. If you don’t like calling people, you can just simply go into your mobile application in each one of your banks or you can go to their website. Just log in to your account and select a new due date.
The best advice to manage your credit is to assign a due date that’s after your mid-week of pay. Some people get paid every 15th or at the end of every month. Some people get paid bi-weekly. People usually, on average, get paid twice a month. On the first pay, usually around mid-month, you’re going to use that pay to take care of your credit card debt. On the last pay, the one that you receive towards the end of each month, you’re going to use that to pay your rent.
If you get to pick to get all of your credit cards to be paid on the 17th. You want to wait right after the 15th of each month, so your new due date, it’s going to be the 17th of every single month. Then, after that, what you’re going to do is schedule electronic payments. You have two choices:
- You can schedule a fixed amount to go out every single month.
- You can have them charge you the minimum payment.
Remember that paying just the minimum amount will accrue a lot of interest, but paying something is better than nothing. You don’t want to default on any credit card payment because it’s going to hurt your FICO score badly.
Manage your Credit Cards: Estimate your expenses
Let’s say you did a thorough analysis and you got an estimate of how much money you spend. Instead of doing the minimum amount, you’re going to take care of a fixed amount. You’re going to make an automatic fixed amount payment every single month.
For example, if you have roommates and your portion of the rent is $1,000. You’re going to use your credit card to pay those $1,000 every month. You know for a fact that you have to make a payment of at least $1,000 every single month. You’re going to schedule that amount.
For groceries, on average, you spend $400 every month. What you’re going to do is that for a particular card, it could be Bank of America, you’re going to schedule on the 17th, a payment of $400 just to make sure you’re never late and that your debt it’s actually covered and you don’t incur any interest.
On the 17th, Wells Fargo is going to cover your cell phone bill. Averaging it out, your cell phone bill is $50 a month. All you’ve got to pay is $50 a month on that Wells Fargo card. Same thing for your gas. If you fill your tank twice a month on overage you’ll be paying $90. When it comes to scheduling auto payments, you know that every single month, you’re going to pay $90 on the 17th. Internet bill, same thing, $50. $50 every single month.
Voilà: You have a list of cards, each one with a role. At this point, you have already updated all of their due dates so that way you can never forget about paying any other card out there. At the same time, you’ve got an estimate of how much you have to allocate to each and one of these cards just because you already assigned a role to them.
You have an idea of how much debt you have in each of these cards. That way, you can actually plan accordingly and schedule those payments in order to efficiently manage your credit, and you won’t have to worry about making a single payment on it ever again.
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