Is debt putting your life on hold? According to a survey, one quarter of Americans ages 18-34 are struggling with debt. And, because of that debt, they’re delaying big life events like buying homes and having children. Credit card debt was the most common type of debt mentioned in the survey. If you want to buy a home or car in the future, you’ll need a good credit rating—and less debt. So here are some tips for using credit cards responsibly to help you build your financial future.
- Check the interest rate before you apply.
Many cards offer a tempting introductory interest rate. But be sure to check the fine print before you apply. Shop around for credit cards with truly low rates—not just low for a few months or a year.
- Don’t open too many cards.
“Apply now—it’s free and you’ll get 5% off your purchase!” It’s tough to say no when staff members ask you to apply for their store’s credit card. But store credit cards often have very high interest rates. Also, your credit report will be pulled each time you apply. Having too many of these pulls in a short period of time brings down your credit score. Only get as many cards as you absolutely need (probably no more than two.)
- Pay off your bill each month—or at least as much as you possibly can.
Leaving a balance on your card from month to month means you’ll pay more interest. If it’s at all possible, try to pay off your whole bill each month. If you can’t do that, pay as much as you can and try to get the rest next month. Never pay just the minimum payment.
- Use rewards wisely.
Many credit cards offer reward points that are redeemable for goods and services. If your card offers cash back, and if you sometimes have trouble paying off your card each month, redeeming your points for cash back is a smart way to pay down your bill without draining other parts of your budget.
- If you can’t afford it, don’t buy it.
This sounds simple, but it’s an important thing to remember. Using your credit card for everyday purchases in order to get reward points and paying your bill in full every month is a good strategy. Save up for big purchases so you’ll be less likely to regret them later.Also, your credit card is not an emergency fund. You should be building an emergency fund to cover any unexpected expenses. Otherwise, you could end up trying to recover from an emergency while also trying to pay off your credit card.
- Know what your card can do for you.
Did you know that some credit cards offer benefits like purchase security and roadside assistance? Always check lists of credit card benefits online (or call the card company to ask for one) when you consider applying for a card. Just by using a credit card, you may have access to benefits that can save you money and protect your purchases!
- Check your account regularly.
Log in to your credit card account regularly online and be sure to check every purchase on your statement. That way, you can spot any fraudulent charges that may have been made. Remember that list of benefits from paragraph 6 above? It should include zero liability in case of fraud.
Although credit cards can be useful tools, misusing them can lead to a lot of trouble (and extra debt.) By keeping only a few cards active and paying them off promptly, you can use credit cards to improve your credit score and help build the future you want.
Our cards offer a robust list of benefits and reward points you can use for cash back, as well as low interest rates. Plus, every time you use our credit cards, we give back to causes you care about! If you’re looking for cards that will help you change the world as well as your credit rating, check out our credit card options.
This article should not be considered legal, tax, or financial advice. You may wish to consult a tax or financial advisor about your individual financial situation.