Using a credit card responsibly
By: Carol Ann Aldridge, CCUFC | Certified Lending Counselor
In May of 2021, the American Bankers Association released data stating there were roughly 365 million open credit account accounts in the United States. That accounts for nearly 80% of Americans! For many of us when we received our first credit card, we weren’t taught the fundamentals of credit and how to use it responsibly. Below are a few tips to help navigate credit card usage, keep you out of unnecessary debt and keep you accountable with your credit.
- Have an emergency fund set aside
Your first goal of being financially fit is to have an emergency fund set aside, typically between 3-6 months of living expenses. This reduces the need to rely on credit should an emergency were to arise.
- Pay the balance off in full each moth
Carrying balances over from month to month is costly. Depending on the balance and the interest rate, paying just the minimum balance can result in paying almost double the original amount!
- Don’t spend more than you could afford to pay in cash
A general rule of thumb is if you can’t afford to pay it today, you can’t afford it. Using this rule will force you to save for big purchases and understand the difference between wants and need.
- If overspending is an issue for you, only use it for small bills and pay it off as soon as it clears
If you’re worried that you’ll overspend throughout the month, start off by only paying one or two small bills with it. This will encourage healthy spending habits and keep your debt in check.
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