Credit cards are a great financial tool. Responsible consumers reap benefits, such as security, convenience, and rewards programs. Proper use can boost credit scores, helping users earn lower rates on home mortgages and car loans.
When consumers use credit unwisely, they risk creating a financial hole that is difficult to climb out of. Unpaid balances accumulate interest and fees that make it even harder to pay off the balance.
By adopting a few good habits, you can enjoy all the great perks that credit cards provide, while avoiding costly mistakes that jeopardize your financial health.
Pay on-time – every time
The most important habit to adopt is paying the bill on-time. Doing so will save money on interest and build a healthy credit history.
An easy way to ensure on-time payments is to enroll in autopay. Most card issuers and banks offer automatic bill-pay services. Another option is to subscribe to text or email reminders that notify you when your payment is coming due.
Use credit cards sparingly
Spending money is easy – too easy. Be careful not to rack up a balance on items that you don’t need and can’t afford. While credit can be a good way to finance purchases, it is important to be realistic about how much you can afford to pay back.
Pay attention to your account
Carefully monitoring your account will help you spot mistakes or fraudulent activity. Bring any inaccuracies to the attention of the card issuer immediately. Card users enjoy $0 liability on fraudulent transactions, but you must act fast to ensure this protection.
Paying close attention to your monthly statements will also allow you to see patterns in your spending behavior and provide insights that can help you stay on budget.
By adopting good credit habits, you can enjoy all the great benefits that credit cards offer and feel confident that you are safeguarding your financial wellbeing.