If you don’t know the first thing about managing and controlling your spending with a credit card, now is the time to learn.
Many will argue that credit cards are a necessary evil. On one hand, they help build credit and provide funds in an emergency. But on the other hand, overspending and poor debt management can lead to a world of debt problems. Everyone manages credit differently, and there are no hard and fast rules. But if your present plan isn’t working and you’re ready to take control, here are six tips to help you mange and control spending with a credit card.
Create a Spending Plan
If you carry credit cards in your wallet and use them for any and every purchase, high debt is inevitable. There is a better approach. Decide how much you can afford to spend on your credit card each week or month – or limit your purchases to certain items. For example, you might use your credit card exclusively for gas. This method helps you reign in frivolous spending and limits new charges.
Check Your Balance Frequently
Don’t wait until your statement arrives in the mail to check your balance. Sign up for online account management and monitor your spending. This can keep you on track, thus helping you stay within your pre-determined spending plan.
Carry Only One Credit Card
Unless you plan on going on a major shopping spree, there is really no reason to carry multiple credit cards in your wallet. This opens the door to problems if your wallet is lost or stolen. And with access to multiple credit cards, there’s a greater temptation to spend. Keep a card with you for emergencies and leave the rest at home. Carry the card with the lowest credit limit.
Pay Off Balances in Full – Each Month
Commit to this routine and you’ll reign in spending and learn how to manage your debt. There are countless benefits to paying your balances in full each month. Aside from the fact that you’ll avoid high balances, paying in full each month reduces how much you pay in interest, plus you’ll build a stronger credit score. The less you owe, the better your FICO score. And if you manage your consumer debt well, it’s easier to qualify for other financing.
Keep Balances Under 30% of Your Limit
Maybe you can’t pay your balances in full each month. This isn’t a credit score breaker. But if you want to manage and control your spending, as well as improve your credit, keep a low balance on credit cards. Pay more than your minimum to reduce your present balance, and then keep your credit card debt under 30% of your credit limit. If you have a credit card with a $1,000 credit limit, carry no more than a $300 balance.