Using your credit card responsibly
Credit card debt is a major cause of stress for many Americans. Digging yourself out of credit card debt can sometimes seem like an insurmountable task. It doesn’t mean it’s impossible, though.
Whether you’re working to pay off your credit cards (see our blog post on why a consolidation loan may help you with this), or you have just opened your first credit card, instilling in yourself responsible credit card habits will be immensely beneficial.
So what habits can you practice?
Make your payments on time. Late payments will both hurt your credit score and cause late fees. Set a reminder in your phone to pay your credit card on time every month.
Don’t charge more than you can afford each month. Making just the minimum payment each month is how many people end up in credit card debt. Set a budget for yourself and monitor your payments so you do not go over.
Plan for big purchases. A credit card doesn’t mean you can make large purchases without having the money in your bank. Passing the baton to future-you causes nothing but stress. If you want to make a larger purchase (such as a new computer or phone), make sure you have the money saved so you can pay the card in full once the bill comes in.
Check your monthly statement. Save all of your receipts and review your monthly statement against your receipts. If there are any mistakes, double-charges, or suspected fraudulent activity, you can catch it before you pay the money.
Stay below your credit limit. When you hit your credit ceiling, your credit report registers this and marks your report as having no available credit. This brings your score down as credit utilization accounts for 30% of your credit score.
Don’t apply for a lot of credit cards at one time. Again, this activity will bring your score down. When you try to open a lot of accounts at one time, all of the inquiries will bring your score down. This can lead to being denied a card or having to take a card with a larger interest rate than you would like.
Monitor your account activity for fraud. Now with technology, you can log into your online account or phone app as often as you’d like. It is good practice to log into your account at least every few days to monitor the charges being put on your card. This can help you spot possible fraud before it becomes a major problem.