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Tips For Proper Credit Card Management

More than 191 million Americans have at least one major credit card in their pockets. Most have more than one. Last year in the 3rd quarter, American credit card balances grew by approximately 17 billion dollars. Many individuals use their credit card as their primary way to make purchases and while using a credit card responsibly can be a great way to build good credit, they can also be overused.

Managing your credit usage is essential and anyone with the right knowhow can use their credit cards to their advantage. Below are 5 tips to help you on your credit journey.

  1. Make On Time Payments:
    Credit card companies charge interest if you don’t pay your balance by the due date. The FTC recommends that you pay by the due date to avoid interest and fees. Paying off the full balance and not just the minimum is a key. This will aid in your credit score. Credit card payment history accounts for 35% of your FICO score.
  2. Know What Terms You Have:
    Terms and conditions are crucial to making sure you have the correct credit card for your needs. Some cards carry an annual fee to use them. Your card has an APR (annual percentage rate) or the fee you pay for having an unpaid balance at the end of your pay period. Your credit limit is the maximum balance your card allows you to carry at one time.
  3. Have a Use Plan:
    Know what you are going to use the card for. Is it a card you use in just an emergency or are you using it to fill your gas tank up every week? Set boundaries to prevent overuse of your card, making sure you can easily pay off the balance and establish healthy financial habits.
  4. Monitor Credit Activity:
    Examine your bills or use an app to watch your charges. If a purchase does not appear to be correct or an amount seems off; call your lender immediately.
  5. Manage Debt Responsibly:
    Credit card charges are essentially micro loans. You have an agreement with the lender to repay whatever you have borrowed at the end of each month or you incur interest and fees on top of the unpaid amount. It’s very easy to stack debt, even while paying the minimum. It is important that you don’t allow debt to build beyond your ability to make payments.

For more information on responsible credit card management, view this article for tips and apps they may help you in your journey to better credit.