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Credit cards are convenient and are great to use in certain situations. Using a credit card responsibly can help you build credit, earn rewards, safely make online purchases, purchase insurance and more.  However, if you aren’t careful with your credit card purchases it can be easy to find yourself in trouble. The following tips will help you capitalize on the benefits of credit cards without falling into trouble.

1. Make your payment every month

This is our number one tip for a reason, it’ll keep you out of trouble!  If you need to make a purchase that you can’t pay off right away at the end of the month, always make your minimum payment at least. This will keep you from accruing unnecessary fees which add to your balance and help you avoid a collection on your credit score.

2. Try to pay your balance each month

Our second tip is to pay off your entire balance every month. It’s tempting to spend more than you can afford with a credit card. We recommend keeping your balance small enough each month you can pay it off in full. That way, if you need to use your credit card for an emergency you won’t fall further in debt.

3. Always know your available credit

Not keeping track of how much you’ve already spent during the month can lead to you spending more money than you intended. This might mean you can’t afford the payment or balance when the bill comes due. Keep a close eye on how much your spending so your monthly bill isn’t a surprise.

4. Use your credit card periodically for small purchases

This is a great tip to help you build your credit. Carrying a high balance on your credit card will actually hurt your credit score because you have a high amount of debt utilization. Using your credit card to make small purchases you already planned on and then paying off the full balance will build your credit history and send that credit score up.

5. Put your card away until it’s paid in full

If you find yourself in a situation where you can’t afford the balance on your credit card, freeze it in a block of ice! Ok, maybe not really, but do put it away and don’t use it until you’re caught up. If you can’t afford your balance and you keep using your credit card, you may never be able to catch up and you’ll be stuck in debt. Instead, stop using your credit card, pay off as much as you can each month until your balance is paid in full.

6. Watch out for reward offers

Many credit cards offer a “sign up” bonus or other promotion that guarantees a high number of rewards points if you spend a certain amount over a period of time. While these rewards are often more generous than typical monthly rewards they require a high level of spending to earn. If you can’t afford to pay off your balance in full each month, avoid these promotions. The cost of carrying a balance and being charged interest each month will far outweigh the benefits the promotion gives you!

It’s important to be responsible with any debt you take on. Remember to keep track of your car loans, home mortgages and other personal debt that you may have when you are considering using a credit card. Being able to afford all your payments each month is important to avoid falling behind on your balances and to build your credit score. If you need help managing your debt or building your credit score, stop in and see us. We have many options to help you get on track or stay on track when it comes to using credit responsibly!