When used correctly, a credit card will positively influence your financial future and improve your credit score. However, there are plenty of pitfalls to using credit cards if you do not manage them responsibly! Understanding how credit works can be difficult, so make sure you understand credit and debt and how it relates to your finances. In the following blog, we have outlined 5 tips to take into consideration.
1. PAY OFF THE BALANCE EACH MONTH
Just getting this one out of the way first and foremost, you’ve probably been told this before and it probably seems the most obvious, but we cannot stress enough how important it is to make your payments on time. This will help you avoid future interest payments, late fees and lowering your credit score. It is also a good practice that will help you manage and keep track of your spending.
2. SET UP AUTOMATIC PAYMENTS
When possible, we encourage you to set up automatic payments. This will lower the risk of missing a payment, and incurring late fees and interest payments as a result. We recognize that it can be cumbersome to remember all the monthly payments you have to make, so setting up as many automatic payments as possible will help you make sure that everything is accounted for financially.
3. CAREFULLY TRACK YOUR PURCHASES
Aside from the inherent benefits of making sure you aren’t “over-spending” or being too frivolous with your finances, keeping track of the purchases made on your credit card can also help you quickly detect theft or suspicious activity. Don’t let fraudulent activity impact your credit score, catch it early on and make sure it is reported!
4. BE AWARE OF THE FEES TIED TO YOUR CREDIT CARD
When you receive a credit card make sure to be fully aware of any usage fees. Many cards will come with cash advance or foreign transaction fees, and if you are not careful you may be paying more than necessary in fees for these transactions. Being fully aware of the fees tied to your credit card can help you make more informed decisions. Whether traveling abroad or making online purchases to a merchant based outside of the U.S., it is beneficial to take into account these transaction fees.
5. TRY TO AVOID MAXING OUT YOUR CREDIT CARD
Running up a large credit balance each month can be detrimental to your credit score, therefore properly managing your credit limit and ensuring that you have the financial means to pay the balance each month will help aid you from falling into credit card debt. It may be enticing at times to run up your credit limit, but we highly encourage you to use caution when making payments with your credit card.
If you ever have questions on credit or on smart spending habits, do not hesitate to reach out to a CES Credit Union employee! We always appreciate the opportunity to help secure the financial future of our members! Learn more about the credit cards offered through CES Credit Union at the following link, https://bit.ly/3vv4zHh.