Use Your Credit Cards Responsibly!

by ECCU

September 11, 2015

You probably know someone with credit card “issues.” That person might greet you in the mirror each morning. Take heart. It is possible to use credit cards responsibly rather than let them rule your life.

Here are five tips on how to use credit cards wisely:

1. Pay off your balance every month.
   Not only does this practice keep you from piling up debt, it also keeps you from paying money for interest that could be better used elsewhere. This means don’t get in the habit of making minimum-only monthly payments. If you can’t pay the whole balance, get caught up as soon as possible so you are able to pay if off each month.
    
2. Use your credit card for most purchases…IF!
   And notice this is a BIG IF. Once you’ve developed the discipline of paying off your balance each month, you’re positioned to take advantage of a credit cards with rewards like cash back. With these cards, you earn a percentage of every dollar you spend, which amounts to saving money every month, (of course this only applies if you also follow tip #5 below.) When you're considering one of these cards, compare annual fees, limits on which purchases qualify or other features offered. One of the best options on the market is ECCU’s Visa® Gold Everyday Cashback Credit Card. You earn 1.5% unlimited cash back on every purchase with no annual fee and no international transaction fee.
    
3. Try not to exceed 30% of your credit limit.
   Unless you are planning on paying off the balance before you are charged any interest, keep your balance low. This means if your card’s limit is $3,000, try not to charge more than $900 on it. Besides helping your credit score, this practice keeps your balance lower and easier to manage.
    
4. Use a credit card as a budgeting tool.
   Yes, a credit card can actually help you manage your money. If you use it to make all your purchases, then your monthly statement becomes an exact record of your expenses for any given month, which is very helpful when budgeting, recalling donations for tax purposes, and more. But remember, this approach only works if you pay off your balance every month. Are you detecting a theme here?
    
5. Don’t charge things you can’t afford.
   About.com says “if you can’t afford a purchase today, chances are you won’t be able to afford it tomorrow, or even the next month.” The temptation here is to think that you can afford something if you’re able to make the minimum payments on it. Any financial counselor will tell you that is faulty thinking. If an unexpected event or emergency prevents you from making those “low monthly payments,” make it a priority to pay it off as soon as you can.

Credit cards can definitely get you into financial trouble. But used wisely, they can actually help you manage your money, protect your purchases and give you back a little cash.

Category: Missionary Minded