A lot of people are afraid of credit cards. There are countless horror stories of people getting way over their heads in debt by mismanaging them. But it doesn’t have to be this way. These are some tips for managing your credit cards in the best possible way.
Pay Off Your Balance Every Month
Credit cards are not free money. Too many people make the mistake of thinking that they can get by with just paying their minimum balance each month. While this is technically true, it’s going to end up hurting you in the long run. You’re paying a high interest rate on your credit card balances. If you don’t consistently pay these down, you’ll end up owing a lot more than the cost of your original purchase. As noted by Experian, it’s a myth that leaving a small balance on your card each month can boost your credit score. This does nothing to help your credit and will just cost you in interest payments.
Use Them to Pay for Essential Purchases, Not Impulses
It’s easy to use your credit card to pay for things. All you need to do is swipe it, and boom; you’re done. The problem with this is that it encourages unnecessary spending with consumers. Credit cards a great payment method for things that you’ll need to spend money on regardless—such as utilities or insurance payments. This is because you’ll get rewards for using your credit card. But you can quickly get into trouble if you start using your cards for things that are more impulsive than necessary.
Don’t Skip Payments
Skipping your credit card payments isn’t going to help you. This will only make your financial situation worse if you’re in a bind. It’s better to make a minimum payment on a card than to skip altogether.
A few things will happen when you miss a credit card payment. You’ll likely be responsible for a late fee, as well as extra interest. Doing this can also put a ding in your credit score. It’s a good idea to set up an automatic payment method for your credit card. This will ensure that you’re at least making the minimum payment each month, which will help you avoid the issues associated with missing payments.
Get Help If You Need It
It’s not uncommon for people to lose control of their credit cards. Such easy access to credit is sometimes too much to handle for consumers—especially people who are new to managing their personal finances. It’s a good idea to seek help if you find yourself in trouble with your credit cards. Working with a debt negotiation or settlement company is one of the best options for fixing your credit card debt. Freedom Debt Relief is one of the most respected names in this field. They’ve helped countless people regain control of their financial situation by working with lenders. Check out Freedom Debt Relief reviews to see what happy consumers are saying about their experiences.
Don’t Use Too Much of Your Credit Limit
Using a credit card is a great way to build your credit—assuming you do it responsibly. However, even if you’re paying down your balance each month, it can be detrimental to your credit if you use too much of your spending limit. This is called credit utilization, or how much you actually use of your available credit each month. Most experts say you shouldn’t go above 30 percent of your total available credit.
Look for the Best Possible Rewards
Rewards are one of the most important aspects to consider when shopping around for credit cards. Cash back is going to be useful to all people. However, you should also look for cards that provide specific benefits for things you’re going to spend money on anyway. People who do a lot of travelling might want to get a card that provides high rewards for airline miles. No matter what it is, try to maximize your rewards by looking around for the best cards.
Credit cards can be super beneficial, or highly detrimental, to your life depending on how you use them. Staying on top of your debt, and not spending above your means, will allow you to reap the most rewards from your credit cards.