Money

Make it easy You Shouldn't Use Your New Credit Card Until You Do These Things

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Trying out a new credit card is like driving a new car for the first time: In the same way you might adjust the seat and mirrors, locate the emergency brake, or fiddle around with the air conditioner controls, you’ll want to fine-tune the settings for your new card before you start spending. Here’s a checklist of things you should do when you get a new credit card.

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Activate your card

Seems obvious, doesn’t it? Well, not to everyone: I’ve made the mistake of tearing open the envelope for a new card, running off to buy something, and having my card declined right at the counter. It used to be more of a hassle to activate cards over the phone with a customer service rep, but the process is automated now and only takes a couple minutes by phone or by registering online (there should be a URL on the sticker or in the letter that came with the credit card).

Destroy your old card after the new card is activated

If your new card is replacing an old one, you might as well cut up the old credit card right after the new card has been activated, to avoid identity theft. Make sure you cut up the card, including the magnetic strip and chip, as thieves can steal information from both.

Set up mobile banking

As long as you follow your lender’s instructions on how to download their app, it should be as safe as going through their site on a browser. The main advantage of mobile apps is the convenience (I often pay off my credit card right after making a purchase so I don’t forget), but the added security of push notifications that can tell you when your card is being used without your permission is great, too. Plus, you’re likely to check your account balance more regularly.

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Call customer service to confirm the card’s bonus terms and adjust your billing cycle

Many cards offer a cash-back bonus for spending a certain amount of money within a few months. The problem with this is that the bank’s messaging about bonuses isn’t always explicitly clear once you’ve got the card. When I signed up for a Bank of America Cash Rewards card, there was nothing on the site or app that said, “Hey, the bonus is active, you have this much to spend and this many days to do it.” Plus, once you hit the goal, the cash reward is often delayed, which can make you a bit paranoid that you somehow missed the spending goal.

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Therefore, before you spend thousands of dollars chasing a bonus, contact a customer service rep to confirm the bonus amount, spending goal and the date the offer actually started (it should be the activation date, but that’s not always the case).

Lastly, you might want to align the billing cycle for a date that’s most convenient for you. One trick that will help your credit score is to confirm your credit card’s closing date, which is when your balance is reported to the credit bureaus. By knowing this date, you can time your payments so that the reported balance is at its lowest possible total (for me, it’s after pay day, in the middle of the month). This way, you’re using as little debt as possible, which is a good thing, as the amount of available credit you don’t use accounts for 30% of your credit score.

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Set up automated payments 

The downside of credit cards is that they come with ridiculous late penalties and interest rates, so you’ll want to make consistent, on-time payments on any outstanding balance that you might owe (plus, again, it helps with your credit score to do so).

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Since it’s easy to forget and miss a payment, set up automated payments through your checking account, either on the bank’s app or its website. You can even set these payments up to pay off the full balance each month—whatever that may be at the time. The only risk with automated payments is overdraft charges, so you’ll still need to stay on top of your checking account balance each month.

Activate your rewards

Cash back cards often have boosted rewards based on different categories of spending, such as 3% cash back for online shopping versus 1% for all other spending. Since reward cards often come with multiple categories that have tiered rewards, you’ll want to log into your card’s app or site and adjust these categories so they align with your spending habits. Your card might also have other perks like statement credits or short-term coupons that need to be activated before you can claim them (look for a “rewards” tab in your lender’s app or site).

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Source link: lifehacker.com

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