Credit cards are an important financial tool, but they need to be used responsibly. Each time you use a credit card, keep in mind you’re borrowing money you’ll need to pay back with interest. That’s why it’s important to be mindful of your credit card spending. Here are five ways to ensure you’re using your credit cards responsibly.
Pay More Than the Minimum
There’s a minimum payment amount due on every credit card statement you receive. No matter how tempting it may be, you should try to pay more than just the minimum payment each month. Remember, you have to pay interest on the money you owe. The larger your balance due—the more you’ll end up paying in interest. Try paying off as much of the balance as you can afford. Start by challenging yourself to double the minimum payment and then see if you can keep increasing your payment a little each month.
Don’t Rely on Your Credit Card for Everything
You shouldn’t rely on your credit card for paying regular monthly bills like your rent or utilities. Paying all your bills on a credit card puts you in danger if you ever lose your job and can’t make a payment. You don’t want to put yourself in a position to get buried by credit card debt.
Don’t Max Out Your Credit Limit
Maxing out your credit card limit can have a negative effect on your credit score and you may have trouble when it comes to applying for loans. When a lender sees you have a maxed out credit card, it’s a concern that you already have more debt than you can manage.
It’s ideal to use less than 30% of your credit limit. Spending under your credit limit will also help make your monthly payments more manageable. If you want to help improve your credit score, try keeping small balances and paying them off in full every month.
If you’re looking for an easy way to keep track of your credit score, you can view your FICO® Score through our Mobile Banking app. That way you can understand your credit and avoid surprises. Visit our website to see what components make up your FICO Score so you know what areas are most important to improve.
Never Take Out Cash Advances
Most credit card companies offer cardholders the opportunity to take out a cash advance on their card. The cardholder can withdraw cash up to a certain limit—usually up to a percentage of your credit limit. You should avoid taking out a cash advance on your credit card because it can have a negative effect on your credit score. It also increases the balance due on your credit card, which can make payments become even more challenging.
Read the Fine Print
Know your credit card inside and out. Be sure to read all the fine print in every letter you receive from your credit card company. You don’t want to be surprised by any unexpected fees or interest rate changes.
When used responsibly, a credit card can be a helpful financial tool. Some credit cards can even be rewarding. For instance, our Rewards Platinum Visa® credit card lets you earn points which you can redeem for cash back, merchandise, gifts cards, travel and more. Now through September 30, 2017, you can earn double the rewards points on all purchases and balance transfers on your Rewards Platinum Visa®. Plus, all new cardholders can take advantage of the 2.99% APR balance transfer* for 12 months. Visit our website for more details or contact our Total Solutions Contact Center at 303-422-6221 for more information.
*Introductory rate of 2.99% APR is applicable to balance transfers with a minimum of $1,000 completed within 90 days of account opening. After the 12th billing cycle, your rate will adjust to your standard variable rate.