Read the fine print on your credit card statement. In most cases, you’ll see the interest rate is anywhere from 19.99% up to 29.00%. That might not seem like a big deal because you pay your bill off every month…right? If you don’t pay your credit card bill’s full balance every month, you end up paying interest charges that add up quickly. If it’s a one-time thing, it’s not such a big deal. But when you use your credit card regularly, it can take its toll financially. Here are a few best practices for using your credit card. They could save you money and potential credit problems down the road.
Using Your Credit Card Responsibly
Keep Track of Your Credit Card Use
It’s boring and mundane, yes. And isn’t it what credit card statements are for? It is, but it’s often too late once you’ve receive the bill in the mail. Because spending on your credit card only takes a swipe or a tap, it can seem like free money…until the bill comes. Use a checkbook register to track your credit card spending every time you use your card. You’ll be more conscious of how often you use your card and how much you spend. It can help you avoid the spontaneous spending that gets you into trouble.
Set a Payment Reminder in Your Smartphone
Missed payments come with interest charges. Avoid paying your credit card company more than necessary by reminding yourself to pay your bill on time. Set the payment reminder a week in advance of the due date and again on the due date itself. With your smartphone, you can make it a recurring reminder, popping up every month at the same time. You don’t have any excuses for missed credit card payments.
Pay Your Balance in Full
When you pay your full balance before its due date, you don’t pay any interest charges. Even on small balances, 20-30% interest can add up for just a single month. If you can’t pay the balance in full, pay as much as possible and put your card away until it’s paid off. That way, you can prevent maxing out your card and getting into money troubles.
Don’t Use It Like a Loan
The problem with using a credit card like a loan is you can add to it. Your original purchase might be paid off in a few months, but by then you have several other items added to the bill. It’s a vicious cycle of paying interest that you wouldn’t have to if you only buy items you need at the time.
Freeze Your Troublesome Cards
If you find you can’t control your spending with your card, freeze them – literally. Put your card in a container of water in the freezer. If you decide you need it, it will require a day to thaw. During that day, you might reevaluate the need for your desired purchase, avoiding charges that would otherwise get you into financial trouble.