Credit cards make purchasing everything from essential to leisure items easier since the shopper doesn’t have to deplete cash savings. Unfortunately, not everyone employs fiscal discipline with credit card use, leading to troubling debt. However, following some helpful tips to use a credit card responsibly could prevent such troubles.
Only Borrow What You Can Afford to Pay Back
Someone who makes $3,000 a month and has $2,500 in essential monthly living expenses shouldn’t be charging $900 in unessential purchases every month. Staying within one’s budget keeps card balances within reason and might leave enough available credit to cover emergency expenses.
Keep Credit Card Limits Low
When a card’s limit is $2,000, that’s all the borrower can access. For example, if the card has a $10,000 limit, there’s a risk that the account holder might use a credit card excessively. Credit proves helpful during tough times, so a decent borrowing threshold seems helpful. For example, persons struggling with fiscal discipline might not want to have too many cards with high limits.
Pay the Card Back on Time
Missing payments lead to late fees and potential interest rate increases. A credit report might also suffer from negative marks for late payments. Since people forget, setting up automatic payments could be good, but established payment settings should prove reliable. Ask a SoFi credit card representative for payment setting assistance if necessary.
Pay More Than the Minimum Amount
A credit card statement presents the current balance and the minimum required payment. Paying the minimum monthly amount is far better than missing a payment, but it will make using a card more costly. Remember, credit card companies charge interest on unpaid balances. Lowering the balance by paying more than the monthly minimum saves money. Paying off the entire balance each month could even make credit card use interest-free.
Check Out the Terms and Conditions
Not every credit card user truly understands the costs and rules associated with a particular card. Reviewing the terms provides information and insights into being more cost-effective with the card. For example, the terms might reveal perks that the account holder could access. So why not take advantage of special perks when available? With Sofi cards, users “get rewarded for spending on popular brands” through a cashback program. That’s one way a credit card could become more economically helpful to customers.
Beware of Identity Theft and Illegal Activity
Sadly, credit card accounts could become compromised. If a hacker gains access to an account number, mysterious charges may appear on the statement. The card does not need to be part of a grand security breach for someone to use it. For example, a card might be stolen, or the account holder may lose it. Whoever gets the card could go on an illegal shopping spree. Check statements carefully each month to make sure all purchases are legit. Contact the credit card company immediately if a card is missing.
Credit cards could provide valuable help to those making purchases. Consumers need to help themselves by being fiscally responsible.