Financial wellness is not as easy to achieve as you might think as it entails having healthy spending habits, especially when using your credit cards. Using credit cards is pretty straightforward since you just need to whip it out when you want to pay for stuff and you’re good to go. The using it wisely part is where it gets tricky since using it is only one part, you would still need to pay for those purchases in the upcoming months. Things can easily spiral out of control if you don’t use it wisely.
Live Within Your Means
You should make a budget of your expenses and live within that budget. You should never use credit cards just so you can pay for stuff that you don’t really need or can’t even afford. Of course you can include expensive everyday stuff on your budget, but only if you can really afford it.
Already in Financial Distress? Stop Using Your Credit Card
If you’re already in trouble financially, don’t use your credit card to get out of it. It’s like taking out one loan to pay for another. It’s just a bad idea. You’ll be racking up more fees on top of the money you already owe. The best way to deal with this is to start early and avoid the situation altogether. Save up money to use on a rainy day.
Always Pay Your Bills on Time
You should never delay your payments on bills or skip them altogether. Remember that a high percentage of your credit score depends on you making timely payments. Show that you are financially-responsible and trustworthy when it comes to your credit.
Stop Making Minimum Payments
A good financial habit is to always pay your monthly dues in full to avoid paying interest on the purchases you make using your credit card. If you only pay the minimum amount, your debt will not only take a long time to pay off, you’ll also be paying more than what you really owe.
Avoid Exceeding Your Credit Limit
Reaching a point of exceeding the credit limit means that you’ve already maxed out your card. Credit utilization or how you make use of your credit comprises a big chunk of your credit score. Maxing out your credit card gives out a vibe that you are unable to use credit responsibly and will cause a big drop in your credit score.
Check Your Credit Report
You should always make a habit of checking your credit report, at least once a year. Checking your credit report will not only help you catch any irregularities that may have occurred, but also to reflect on your spending habits and correct it before it gets out of hand. But don’t do it like every week or so as multiple inquiries might lower your credit score. And don’t micromanage.
Enjoy the Perks
Using your credit card regularly and responsibly can gain you multiple perks like cash back, travel miles, and free meals on select restaurants. Make sure to enjoy these rewards to reward yourself on a job well done.