Guest post by Becky W.
I have a love/hate relationship with credit cards. You need them to build up your credit so that you can get great rates on home and car loans, but without proper discipline, they are an easy way to get yourself up to your eyeballs in debt. Millions of Americans suffer from excess credit card debt each year, and many of them struggle to make their monthly payments.
In our household, we have managed to wrangle our credit card usage. After using a couple of credit cards frivolously during college, my husband and I have resigned to only use credit cards that offer cash back rewards, and to only use them sparingly. If you too are wanting to keep your credit card spending under control, but still let it boost your credit score, do the following when using your cards:
Pay Your Balance Each Month
The quickest way to rack up a substantial amount of credit card debt is by charging way more than you can afford to pay off. To keep from paying high interest and annual fees, always pay off your credit card balance at the end of each month. If that means that you can only afford to charge a tank of gas or a family meal once a month, that is fine. Charging and then paying off that balance will keep your credit score up, keep a positive credit line, and keep you from overspending.
Look for Reward Programs
In our household, we only sign up for credit cards that offer reward programs so that we are able to benefit from our purchases. Most credit cards will offer points for each purchase you make which you can then later redeem for cash back or other rewards. We also keep a no foreign transaction fee credit card for when we choose to travel. While these cards don’t often offer the direct rewards that other cards do, they do prevent us from having to pay fees while abroad which can save us quite a bit.
Read the Fine Print
Many cards offer no annual fees and zero percent or reduced interest for new card signers. While this may seem like a great deal, these low interest charges and zero annual fees usually don’t last. Before signing up for a card, read the fine print to make sure that the interest rate you are signing up for will last and that no additional fees will be tacked on to the card 6 months after opening the card account.
Credit cards are tricky, but that doesn’t mean that you shouldn’t use them. They are a great way to build credit and maintain a solid credit history, but you need to exhibit discipline when using them.