Managing credit card debt seems like common sense…until you realize we’ve spent about $887 billion in debt and increased our debt by 13% in 2022. The Experts Financiers say it’s the fastest rise in more than 20 years.
Where do people go wrong? Usually it’s because we don’t stop to read the fine print of the contract – and we also avoid planning our finances in advance, down to the last date and the last dollar.
In this article, we’ll look at some helpful tips for effectively managing credit cards so they work for you, not against you.
1. Read your card contract carefully
The first thing you need to do before signing up for a credit card with a company is to make sure you understand the fine print before signing. This involves further research (possibly in your spare time before heading to the bank) and a full understanding of the terms and limitations of the contract.
This will help you know what to expect regarding fees, due dates and interest rates, as well as other relevant information.
2. Set up automatic payments to avoid late fees
Paying your bills on time is imperative, especially with credit card companies. Setting up automatic payments on what you know you can pay is also useful for those who forget to pay their bills manually on time. According to Consumer Financial Protection Bureau (CFPB), you must be very careful that your credit payments are paid on time to avoid future debts and potential bankruptcies.
3. Explore options for consumers with bad credit
If you have bad credit and aren’t sure which credit card company to choose, it’s best to opt for credit cards that offer no minimum deposit.
There are options for anyone with bad credit.
Credit cards with no minimum deposit could include the Premier debit card from MasterCard, the gray credit card Premier Bankcard, the MasterCard Surge card, the MasterCard Reflex card, the MasterCard Indigo credit card, the Visa Total card and the Double Your Line MasterCard from Merrick Bank.
Using a credit card with no minimum deposit will help you financially if you have bad credit.
4. Pay more than the minimum
Paying more than the minimum on your credit cards saves you from having a remaining balance. It also saves you from paying interest on the remaining balance.
Paying only the minimum and having a balance can make it difficult to pay off long-term debt. This is why the CFPB recommends that you make sure to pay your monthly balance when you can and pay a little more if you can to avoid accruing interest.
5. Stay in or below your credit limit
When it comes to credit, make sure you only spend what you need, or ideally less than your credit limit indicates. This is because your credit score can easily be affected by your credit utilization rate, which is the amount of available credit you use.
The lower your credit utilization rate, the healthier your credit score can be. The CFPB recommends using no more than 30% of your credit limit.
6. Reconcile your monthly statements for greater accuracy
Keeping track of your monthly statements as they come in, whether online or in the mail, is a great way to have peace of mind when it comes to monthly expenses. It will also help you spot fraudulent transactions as they happen, so you can stay on top of fraud reports.
If you notice a suspicious charge on your statement, report it immediately to your credit card issuer so they can address it. In most cases, the amount can be refunded by the issuer immediately upon declaration or within a few business days.
Click here to learn more about why reconcile your finances assistance.
7. Report Lost or Stolen Cards Quickly
No one likes the feeling of having lost one of their cards, but if this happens to you, you should make sure to report the lost or stolen card as soon as possible. This will help protect your identity and your assets when you receive your new card in the mail.
Most card issuers offer a $0 fraud liability, which means there are no hidden fees for reporting your card stolen and having to have it reissued. In some cases and with some issuers, you can also lock your card to prevent it from being taken if it is misplaced.
8. Use credit cards to fix bad credit
Using a credit card and meeting minimum payments is one of the best ways to get good credit because it shows how you’re managing your credit over time. It can help you file personal loans and large purchases like houses or cars.
Making sure you’re paying the minimum and only using a small portion of your credit will also help you get better credit over time. You can apply for a credit card online and even check your application online to get up-to-the-minute results on final approval.
Credit cards are an important part of everyday adult life, but it’s important to make sure you have one that fits your lifestyle and budget. Shopping around for credit cards can be a daunting task, as it depends on your overall financial health over the years.
The more independent research you do before committing to a financial institution, the less likely you are to fall into unexpected debt. Why not apply for a card today?