Don't let credit cards ruin your finances
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Credit cards are a double-edged sword. They can greatly improve your credit if used wisely, can help you accrue rewards, and help you regulate your budget and spending. But if your credit card spending spirals, you can be hit with late fees, mounting interest charges, and see your credit score tank. Here are seven tips to help you with your credit card usage to stay out of trouble. If your credit cards get out of control, remember that a well-timed North Carolina bankruptcy can help. Contact the Law Offices of John T Orcutt for help.
#1 Prioritize highest interest cards
Credit card interest can range greatly from 0% on balance transfer offers up to more than 20% for subprime credit cards. The higher the interest, the more money you will owe if you carry over a balance month to month. If you are carrying balances, paying extra money on your highest interest card will minimize finance charges. Once you pay off that card, devote the extra cash to the next highest interest card.
#2 Pay your bill twice per month
If you use your cards a lot during the month, you may want to pay your bills twice each month – once on each payday (for those paid biweekly). This can minimize finance charges and keep your balances from exceeding the recommended 30% limit (see more on this below). This also assures you never miss a payment, never incur a late fee, and can keep you from going over your limit and being hit with an over-limit fee.
#3 Use balance and payment alerts
Credit card issuers offer a wide array of tools to help you manage your credit and one of the most useful are spending, balance and payment alerts. You can usually set up email or text reminders to alert you to payment due dates and when you reach a certain threshold of spending. Not only can this keep you from overdoing it on your cards, but it can also alert you in case your credit card info was stolen and is being used by scammers.
#4 Move your due date as needed
If your credit card due date falls at an awkward time of the month – for instance, when a bunch of other bills are due – it may make it hard to pay more than the minimum. You can likely move your due date to a better time of the month if you call your card issuer and explain that you’ve got too many bills at that time of the month and a permanent to a different time of the month will help you make more prompt payments and more than the minimums.
#5 Don’t put “wants” on your plastic
Using your credit cards wisely is critical. You may use it to cover your fuel costs each month or to charge expenses that your employer reimburses. So long as you pay off what you charge, you’ll be in good shape. Using your card for expenses you normally incur and can afford is fine. What can get you into trouble, though, is charging things you can’t afford but really want. Simply, if you can’t afford to pay cash for it, you can’t afford it, so don’t charge it!
#6 Don’t carry over more than 30% of your limit
By keeping your total revolving credit expenditures at 30% or less of your total credit line, you can optimize your credit score. Total up all of your credit card limits and divide by three to see what should be your cap on total spending. Paying twice a month can keep you within these bounds. Also, credit card issuers send reports to the credit agencies once a month on a date that may not coincide with your payments so you may want to pay more often to keep at one-third of max credit limit or less.
#7 Take advantage of rewards
Rewards cards can be great if you get more out of the rewards than you pay in interest. If you can pay off your balance in full each month, you can reap the rewards without paying any interest at all. That’s the best way to ensure you get your money’s worth. If you have a variety of rewards, use your cards wisely to get the most out of the card issuer offers while minimizing your cost to access those rewards.
By wisely managing your credit card usage, you can stay out of trouble, use your cards to improve your credit score, and never find yourself in a tight spot with your finances. But sometimes, financial problems crop up that can get the better of anyone. If you’ve had a bout of unemployment that got you off track, or a divorce, accident, illness or other major life event wrecked your finances, we can help. Call +1-919-646-2654 to speak to one of the North Carolina bankruptcy experts at the Law Offices of John T. Orcutt. We offer free consultations at our offices in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington and can help you get a fresh start and the peace of mind you deserve.