Credit cards are a significant part of our financial behavior and spending habits. They’ve become such a crucial part of today’s society that we often forget how precarious they can be. Whether you have a single card or a compilation, practicing healthy spending is essential to maintaining a solid and sustainable budget.
As a credit card owner, here are the five tips you need to know to spend smarter.
1. Pay the Minimum, and Then Some
Every credit card company has a minimum balance their consumers must pay to avoid compounding interest — but let’s take it one step further. One of the easiest ways to ensure you don’t fall into credit card debt is to pay more than the minimum balance.
If you’re able to contribute extra money every month, you’ll speed up the payment process and clear your balance — leaving you with more freedom to build your savings or invest your income.
2. Automated Payments
One of the most accessible financial tools you can take advantage of is automated payments. Setting up a repetitive monthly payment helps ensure your income is going exactly where it needs to be so that you can put your time and energy towards your work, family, and the rest of your budget. When you’re in the process of setting up auto-payments, ensure you have enough in your checking account to cover each payment.
3. Avoid a Cash Advance
While it may be tempting to secure a cash advance, it’s a slippery slope. Withdrawing money you don’t have is a surefire way to develop poor spending habits. Instead, your credit card should serve emergency purposes only or the occasional grocery or gas payment to help build your credit.
If cash flow is an issue, an alternative lender like GoDay is a secure option that lets you speak with professionals about your current borrowing needs — avoiding the need to procure hefty interest rates brought on by credit card companies.
4. Regularly Check Your Statements
Staying on top of your credit card payments is one of the simplest ways to ensure you’re not falling behind on payments or overspending. Read through your statement every month and track where each dollar is going — this should give you a clear picture of your spending habits and put some of your purchases into perspective, so you can make healthier choices moving forward.
5. Consolidate the Number of Cards
If you’re a multi-card owner, chances are you’re spending unnecessarily. Credit cards are meant to be tools to build credit and offer last-resort financial help to consumers. If you have several cards in your possession, you likely have multiple balances.
As you pay down any debts, keep no more than two cards and deactivate the others. This will ensure you have a limit put in place and avoid the temptation to spend simply because you have available credit. One of the best tips for credit card owners is to select a card with travel rewards or a cash-back program. If you need to use your card, why not build rewards that you can use towards entertainment or travel in the future?