How To Manage Your Credit Cards
Credit cards can be of great assistance to many people. When you need to borrow some money on the short term, you can turn to your credit cards to help you out. We don’t always have the money we need right at the moment that we need it, but with a credit card you can still spend like you normally would. Unfortunately, having this luxury can lead to some bad habits. Some people spend money they don’t have, and sooner or later they find themselves in debt. If this has happened to you, or you think you are heading in that direction, then we have a few tips that may help you out. Use these suggestions to better manage your credit cards, and you’ll be well on your way to a better financial health.
- Number of Credit Cards – First, you should take a look at the number of credit cards that you own. Having too many credit cards can harm a credit score, so try and keep it to a select few. If you plan on closing down some of your cards, keep in mind that the length of your credit history will impact your score, so it might not be a good idea to close down your oldest cards. Weigh your options and think of the impact it will have on your credit score before making a decision. Also keep in mind annual fees, because if you aren’t using the card that much, you don’t want to be paying for it needlessly.
- Credit Limits – Each credit card you own likely comes with a credit limit. This is the amount you can spend on your card. While it may be tempting to spend up to the limit, this is a bad idea. Not only will it harm your credit score, but it will be harder to pay back. Ideally you only want to spend on your credit card what you can afford. Credit limits should not be seen as the amount you should spend, but the amount you should spend in case of an emergency.
- Credit Utilization – If you add up all of your credit limits among your credit cards, and all of the money you have spent on those cards, the percentage would be your credit utilization. You want to keep your credit utilization as low as you can, and definitely not more than 70 percent. This is the ideal spot for your credit cards, and will make payments more manageable.
- Budgeting – Every time you make a purchase with your credit card, you should write it down. Keep a running account throughout the month so that when it comes time to make a payment, you are not surprised at what you owe. Often people just spend on their cards without thinking, and then the bill comes around and they can’t afford it. The best thing to do is pay off each purchase as soon as you can to make the end of the month less scary.
- Rewards – Lastly, you should take full advantage of the rewards offered by your credit card. Some credit cards will offer you cash back on your purchases, while others will offer you reward points. Using these can save you a lot of money down the line, so make sure you pay attention to what will earn you rewards, and then make sure you use them. Also, when you sign up for a credit card, most will have a new customer bonus, such as no interest for a year, so make sure you take full advantage of these.