When it comes to credit cards, we’re quite a nonchalant society. They’ve become so commonplace that we tend to be looser than we should. Once upon a time, they were handled with kid gloves, treated with respect, and almost never used online. We were afraid to send our info out into the Great Beyond, but, as of 2012, consumers spent $226 billion online (Forrester Research).
That number is expected to soar by 2016 to 327 billion dollars — excluding the sales of cars, homes, gasoline and groceries. $327 billion!
With this rampant credit card use, we have to tighten things up and protect ourselves from overspending. When we fail to make any rules for our own spending, bad things happen. We run up debt and create psychological pressure on ourselves to pay it off, knowing we probably won’t.
But with smart use of our cards, we can avoid that abysmal feeling of loss and torment when we look at our bills.
9 Simple Tips for Smart Credit Card Use
1. Pay off your cards
This is the most difficult and most obvious solution to avoid falling deeply into debt. Yet, you might be surprised by how many people can pay off cards, but don’t. If you have a card with a small enough balance that you can pay it off, do so. Chip away at everything else, knocking the debts out one at a time. This may be the longest part of your credit card journey, but it’s definitely the most worthwhile.
2. Pay more than the minimum
Don’t pay only the minimum each month. You’re throwing money out the window if you’re only paying interest on money borrowed — not to mention that it could literally take decades to pay off. Paying two times the minimum can pay it off in a few years. Even if you can only afford $10 extra a month, pay it.
3. Charge smart
Don’t run your balance up anywhere near your limit. While using your credit card can positively affect your credit history and score, running it too high has a negative effect. Financial institutions look at your available credit, as well as how much of it you’ve used, to determine your overall risk for loans and mortgages. If you must have a balance, be sure to keep it low.
4. Avoid cash advances
Unless life calls with some calamity for which you must have cash on the spot, steer as clear as possible from cash advances. They’re riddled with interest and fees that are not worth the convenience.
5. Pay on time
Whatever you do, pay your bill on time. Fees, charges, and negative press on your history are not things you need. Pay on time and pay less in the long run.
Check other cards to find out what you should be paying in interest, then negotiate with your credit card company to reduce your rate. Don’t accept what you’ve been given as your best rate: call them and talk them down. This is done by smart consumers each and every month.
7. Watch your account
In this digital age, it’s more important than ever to keep a close eye on what’s happening with your cards. Make it a daily habit to glance at your balance and make sure the purchases are all yours. Cut out some Facebook time if you have to — but keep your eyes peeled for fraudulent activity and purchases you didn’t make.
8. Use secure sites to transfer credit card info
Phishers are out there seeking access to your sensitive info. Never send your credit card information over email, or you’re at risk for becoming a victim of fraud. Use a secure site, such as PayPal, to make payments.
9. Keep your accounts open
Once you pay off a card, keep the account open. Closing it negatively affects your credit score by lowering your total available credit, which is a standard used in calculating your score. The more credit you have available that you’re not using, the better you look to creditors.
What are your tips for using credit cards in a smart way?