💅 Slay Your Credit Card Statements & Boost Score

Hey, Wicked Club fam!

Happy Friday!! It’s not just any TGIF, this one's extra special. Wicked Pay is hosting its first-ever credit-themed trivia night at KTM Bar and Lounge! If you’re in NYC I’d be thrilled if you could join us for some fun drinks, brain-bending trivia (about credit!), and to mingle with some awesome people who are into credit (including the Wicked Pay crew, of course!). It's gonna be a blast!

🗒️ This week’s rundown:

• Topic of the week: Slay Your Credit Card Statements & Boost Score 

• Cashback vs. Travel Rewards Credit Cards: Which Is Right for You?

💅 Slay Your Credit Card Statements & Boost Score

Alright folks, let's get straight to it. Paying your monthly credit card bills on time is absolutely vital for your credit score. Not only do timely payments help you dodge late fees and interest charges, but they also establish a positive payment history, which is key to maintaining a solid credit score. However, there's often confusion about what exactly to pay: the statement balance, the current balance, or the minimum payment. It can be overwhelming, I get it. This article will walk you through your credit card statements, the significance of on-time payments, and the consequences of missing a payment or being unable to pay.

🕒️ The Importance of Paying Monthly Statements on Time

Your credit score is influenced by several factors, with payment history being the most significant. A good payment history demonstrates to lenders that you are reliable and capable of managing debt responsibly. Other factors that affect your credit score include credit utilization (30%), length of credit history (15%), new credit (10%), and credit mix (10%). Among these, paying your credit card bill on time is the simplest way to maintain or improve your credit score.

🧾 Understanding Your Credit Card Statement

A typical credit card statement contains several key pieces of information that help you manage your account:

1. Billing Cycle: The period between the statement date of the previous month and the statement date of the current month. Generally, a billing cycle lasts about 30 days. All transactions made within this period will appear on your current statement.

2. Statement Balance: The total amount you owe at the end of the billing cycle, including any purchases, fees, and interest charges.

3. Statement Date: This is the date your statement is generated. It marks the end of your billing cycle.

4. Due Date: The date by which you must make at least the minimum payment to avoid late fees and interest charges.

5. Minimum Payment: The smallest amount you must pay by the due date to keep your account in good standing.

6. Credit Limit: The maximum amount you are allowed to borrow on your credit card.

7. Available Credit: The amount of credit you have left to use.

8. Interest Rate: The annual percentage rate (APR) applied to any balances carried over from month to month.

Refer to this helpful article to understand credit card statements more.

🤔 So What Exactly Do I Pay?

When your credit card statement arrives, you have three payment options:

1. Statement Balance: Paying the full statement balance by the due date ensures you avoid interest charges. This is the best option for maintaining a healthy credit score and avoiding debt accumulation.

2. Minimum Payment: This is the smallest amount you can pay to keep your account in good standing. While paying the minimum keeps you from incurring late fees, it does not prevent interest charges on the remaining balance, leading to higher costs over time.

3. Any Amount Between the Minimum and Full Balance: You can choose to pay any amount between the minimum payment and the full statement balance. This reduces the amount of interest you’ll be charged but doesn’t eliminate it entirely.

So for every statement, you’d want to pay the Statement Balance in full by the due date mentioned on your statement.

⌛️ When to Pay Your Credit Card Bill

To avoid incurring interest and late fees, you should aim to pay your statement balance in full by the due date. Here are a few tips on when to pay:

1. Pay Early: If you carry a balance from month to month, paying early can reduce the amount of interest you accrue. Paying early can also help improve your credit utilization ratio, which positively impacts your credit score.

2. Pay On Time: At the very least, make sure to pay the minimum payment by the due date to avoid late fees and negative marks on your credit report.

🫠 What Happens If You Miss a Payment or Can't Pay

Missing a payment or being unable to pay your credit card bill can have several negative consequences:

1. Late Fees: If you miss your due date, you’ll likely be charged a late fee.

2. Increased Interest Rates: Some credit cards have penalty APRs that kick in if you miss a payment, significantly increasing your interest rate.

3. Credit Score Damage: Late payments are reported to credit bureaus and can stay on your credit report for up to seven years, significantly damaging your credit score.

4. Collection Calls: Continued non-payment can result in your debt being sent to collections, leading to persistent collection calls and further damage to your credit score.

Tip: Set up autopay for your credit card to ensure timely payments and avoid late fees.

🆘 What to Do If You Can't Pay

If you find yourself unable to pay your credit card bill, consider the following steps:

1. Contact Your Credit Card Issuer: Many issuers offer hardship programs that can provide temporary relief.

2. Pay What You Can: Even if you can't pay the full amount, making a partial payment can help reduce interest charges and show good faith.

3. Budget Adjustment: Review your budget to identify non-essential expenses that you can cut to free up funds for your credit card payment.

4. Seek Professional Help: If you’re struggling with debt, consider reaching out to a credit counseling agency for assistance.

🤑 Cashback vs. Travel Rewards Credit Cards: Which Is Right for You?

Choosing the right credit card can help you maximize your benefits and savings. Two popular options are cashback and travel rewards credit cards, each offering unique advantages. Let's explore the differences between the two to help you decide which one suits your needs better.

💰️ Cashback Credit Cards

Cashback credit cards offer a percentage of your purchases back as cash rewards. These cards are straightforward and can be a great choice for those who prefer simplicity and immediate savings. Here are some key features of cashback cards:

• Earning Cashback: Cashback cards typically offer a flat rate on all purchases or higher rates on specific categories like groceries, gas, or dining.

• Redeeming Rewards: Cashback rewards can usually be redeemed as a statement credit, direct deposit to your bank account, or a check.

• Flexibility: Cashback rewards are versatile and can be used for anything, from paying bills to splurging on a treat.

• No Expiration: Most cashback rewards do not expire as long as your account is open and in good standing.

Popular Cashback Cards:

• Chase Freedom Unlimited: Earn unlimited 1.5% cash back on all purchases.

• Citi Double Cash Card: Earn 2% cash back on all purchases—1% when you buy and 1% when you pay.

🛫 Travel Rewards Credit Cards

Travel rewards credit cards earn points or miles that can be redeemed for flights, hotel stays, and other travel-related expenses. These cards are ideal for frequent travelers and offer perks such as:

• Earning Points or Miles: Travel cards often offer bonus points for travel-related purchases and a base rate for other purchases.

• Redeeming Rewards: Points or miles can be redeemed for flights, hotel stays, car rentals, and more.

• Travel Benefits: Many travel cards offer perks like travel insurance, airport lounge access, and priority boarding.

• Annual Fees: Travel cards may have annual fees, but the benefits can outweigh the cost for frequent travelers.

Popular Travel Rewards Cards:

• Chase Sapphire Preferred Card: Earn 5X points on travel purchased through Chase Ultimate Rewards, 3X points on dining, and 2X points on all other travel purchases.

• Capital One Venture Rewards Credit Card: Earn unlimited 2X miles on every purchase, every day.

✅ Which Is Right for You?

• Cashback: Choose a cashback card if you prefer simplicity and flexibility. It's ideal for those who want to earn rewards without the complexity of travel rewards programs.

• Travel Rewards: Opt for a travel rewards card if you travel frequently and can take advantage of the card's travel benefits and redemption options.

You can find many more credit cards in these or any other categories with our Card Explorer feature on our Wicked Pay mobile app. Download here.

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