Tips for Successfully Managing Your Credit Card
Credit cards can be a beneficial tool to build your credit and financial responsibility as long as they are managed wisely. It’s important to know how to properly manage a credit card in order to avoid sinking under a mountain of debt and fees. Luckily, we have just the tips to help you successfully manage your credit card and avoid substantial debt.
Understand Fees and Charges
When you first open a credit card, your lender will provide you with a copy of your card’s agreement statement. Before you can make your first purchase with the credit card, take the time to read over the agreement carefully. This agreement will state whether the credit card has any fees such as an annual fee or other hidden charges such as card protection fees. This is the perfect opportunity for you to fully understand what it means when you open this new credit card and ask any questions about the card while you can. Don’t allow yourself to become blindsided by fees and other charges – read, ask, and understand!
Resist Impulsive Purchases
Charging unnecessary purchases to your credit card can become a bad habit if you let it spiral out of control. These impulsive purchases can start adding up quickly creating a mountain of debt. Try to avoid using it for everyday purchases and save it for larger, less frequent purchases like emergencies such as replacing a tire or an unexpected medical expense.
Keep Your Credit Utilization Ratio Low
Your credit utilization ratio, also known as your debt to credit ratio, measures the amount of available credit you use compared to your credit limits. Your credit utilization ratio accounts for 30% of your credit score calculation. As a rule of thumb, your credit card utilization ratio shouldn’t exceed 40%, but to be on the safe side, we suggest you shoot for 30% or less. This will give you a bit of breathing room for unexpected expenses such as emergency car maintenance. Higher ratios can adversely impact your credit score.
Take Advantage of Rewards Programs
Some credit cards offer reward programs. Taking advantage of these programs can help improve your financial wellness. Money earned from cash back rewards can be used towards paying down your credit card balance or can even be set aside to build your savings. Some credit card reward programs also include discounts for using your credit card in certain stores. You may be able to shop at some of your favorite places without spending quite as much money. Robins Financial offers Scorecard® Rewards Program for our credit card users that offers perks such as travel points, cash back, and much more! Make sure you know when your rewards expire and what type of rewards are offered with your credit card, so you can make the most of them.
Set Up Autopay
We are all human which means sometimes we can be a little forgetful and miss payment due dates – it happens. But missing a monthly payment on your credit card can cause your credit score to drop, plus it’s never good to carry a large balance for long periods. Setting up automatic payments will help you to avoid missing those payment dates.
Pay in Full
The biggest mistake that people tend to make with credit cards is spending more than they can afford to pay back. Paying off your balance in full and on time can help you avoid incurring high interest charges. If you can’t pay the entire balance, pay as much as you can and be sure to make at least the minimum payment on time. An effective strategy when using a credit card is not to spend more than you can comfortably afford to pay down each month.
Credit cards are a huge responsibility, and if used improperly, can leave you climbing over a mountain of debt. Here at Robins Financial, we offer our members the lowest rates, with little to no fees, and great perks. View our rates and credit card agreement for more information, or apply online now or over the phone.
At Robins Financial Credit Union, our mission is to enhance the financial well-being of our members and community. We honor this commitment by providing educational content to help you make the most of your finances. Read our other blog articles to help you gain the financial knowledge you need to succeed.