Credit cards have many benefits: They can be a great way to help you build your credit, they are convenient, and with some cards you are able to earn rewards or cash back. But credit cards can cause financial trouble if you are not mindful of spending and interest.
Spending wisely and keeping on top of credit card debt is essential to maintaining a good credit score. And, when used appropriately, credit cards may actually help your financial situation. These tips can help you keep your spending under control while preserving your good credit.
1. Plan Credit Card Use Carefully
You may want to use a credit card for emergency purposes only—but sometimes, that definition can be used a little too freely, which can lead to overspending. Decide what is considered an emergency and stick to it. When the time comes where you do use your credit card, make sure to set a budget. Then create a plan to pay off the debt as soon as you can. Look for ways you can cut back each month in order to pay off the balance quickly.
2. Limit Emotional Spending
Sometimes, you just need to treat yourself. Maybe you had a tough week and feel like a fun purchase could really make you feel better. Or, maybe you just hit a big goal at work and want to indulge a bit. Regardless of the reason, impulse shopping can be tough on your finances. Look for ways to reward yourself without spending money, and if you do spend, especially on your credit card, make sure it fits within your budget and your ability to pay down your balance on time.
3. Avoid Carrying a Credit Card Balance
The easiest way to build your credit and increase your credit score significantly is to pay off your credit cards each month. While this may sound difficult, if you are unable to pay off your credit cards each month, then you are more than likely overspending. If you are carrying a balance due to unforeseen expenses, such as medical bills, set a budget to get the balance paid off as soon as possible.
4. Manage Debt Payments with a Credit Card
There are situations where using your credit card can make good financial sense. For instance, if you are carrying large balances on several high-interest credit cards, consolidating that debt onto one low-interest credit card can help you eliminate extra interest charges.
If you are considering opening a credit card, Credit Union 1 has several credit card options with terms and rates that may fit your needs and financial goals.
