How Do Credit Cards Work?
Credit cards are a seemingly inseparable part of modern life. They enable us to save time which would otherwise be spent walking to the nearest ATM or running home because we forgot to put enough cash in our wallet in the morning. They enable us to keep a better track of how much money we spend, and on what. And yes, they also help banks and other lending institutions decide how much of a loan risk you might be – and that has considerable impact on loan and mortgage negotiations, credit card charge limits, and even on whether you will be considered to be eligible for a mortgage to begin with.
Still, most of us don’t even quite understand how credit cards work, let alone how to make the most of them, and maximize our credit score while lowering our bills.
Are you ready to increase your knowledge? Good, let’s get started.
The way your credit card works is that it effectively provides you with an automatic loan for whatever amount you want to spend – up to the credit limit of the card. How high is the limit? Well, that depends on how confident your card provider is that you are good for the loan!
While your income, and the existence of any other debts (such as student loans and mortgages) will effect this limit, your credit history is also a major factor in determining your credit limit.
The way to increase your credit card rating, and hence your credit limit, is to pay the entire bill each and every month. That way you also lower your credit card bill for the next month, since you won’t be paying interest on your loan.
You always want to choose to pay your bill in full, rather than the minimum amount. The second option will lead to high interest payments each month until the bill is fully paid. Paying in full to begin with, grants you a grace period and allows you to avoid paying any interest at all on purchases.
How is my credit score calculated?
Every month, credit card issuers send a report of purchases and payments to companies that prepare credit reports. The credit history amounts to 35% of your credit score. That score indicates to banks how much of a credit risk you are. If you do not pay the minimum amount on your credit card purchases each month, your credit score will take a hit (and so will you, when you are charged with late fees!). Pay the bills on full each time and on time, and over time your credit score will rise.
What else can I do to lower my bills?
Given how many purchases and services we manage through our credit cards, given how so many of them seem to be inaccessible, and given the demands on your time, lowering your monthly billings may seem like a truly Sisyphean task. After all, even if you find a less expensive cell phone service provider, for example, how can you be sure they won’t change the policy when you are in the middle of a personal or work crisis?
How can I cut my bills?
Ezsave can help you shrink your bills. Our experts will analyze your monthly bills, identify services that can be procured at lower costs, contact your current service providers (yes, we have ways to get past the non-responsive and evasive agents and robots) and renegotiate your bills.
How much does this cost?
There’s no upfront fees at all – Ezsave only charges a success fee of 35% of the first year’s annualized savings.
For example: assume you pay $300 a month to a provider, and we find a better deal that costs only $200. Your monthly savings are $100, and your yearly savings are $1200. Our commission will be $420, and you will keep the rest – $780.
Are you ready to start saving? Contact us today!