Credit card debt has seen a sharp increase over the last five years. Americans owe more than a trillion dollars for credit card debt, a record amount. That’s up from a mere $854 billion five years ago.
While many people pay off their balance every month, about 40% of credit card users carry credit card debt from month to month, accumulating interest in the process.
Credit cards can be a good financial tool when used responsibly. Read these credit card tips to help you make the most out of your credit cards.
1. Use Your Credit Card Sparingly
A credit card can be a great thing to have, especially in a pinch. However, you want to use your credit card sparingly. Debt and interest can add up quickly.
If you do use your credit card for everyday purchases, make sure that you can pay off the balance every month.
2. Always Pay Your Bill on Time
A credit card could do major damage to your credit score if you’re not careful. Credit card companies don’t tend to offer a grace period, so even a payment that’s a day late can be a negative mark on your credit report.
You’ll either want to sign up for autopay or have a reminder in your calendar to pay your credit card bill.
3. Get Rewarded for Purchases
Some credit cards are known for their rewards. If you use your credit cards and pay it off each month, you can earn some great rewards, such as airline miles or hotel stays.
4. Compare Credit Cards for the Best Deals
One of the best credit card tips is to shop around for the best credit card. You don’t want to apply for a lot of credit cards at once, as those hard checks can hurt your credit score.
You can look and compare different features of different cards, such as the CIBC Select Visa Card. You can look at the interest rates, annual fees, and rewards.
5. Fraud Protection
It’s commonplace for people to use a debit card for purchases, whether that’s a fuel refill or a cup of coffee. Credit card skimming is on the rise, which means that scammers can steal your ID or make fraudulent purchases.
If this happens to your debit card, you could be in major financial trouble because it could empty your bank accounts. You’d have to wait for your bank to restore the funds.
If that happens on your credit card, you can afford to take time to work with your credit card company to remedy the issue.
Credit Card Tips for Responsible Financial Management
A credit card can be a good financial tool, as long as you are responsible with it. Using it to pay for vacations that you simply can’t afford is a bad use of credit.
However, if you can pay off the bill every month, you can get great rewards like cash back or airline miles. It can also be used to build your credit as long as you pay your bills on time.
Like any financial product, you have to be smart about how you use it. Otherwise, it can do more harm than good.
Would you like more credit card tips? Keep reading our blog.