8 Tips for Good Credit Card Management

Getting a credit card can be a sensible decision if you know how to use it wisely. A credit card is a line of credit that you can use to spend anywhere the card is accepted. Limits vary depending on your credit score and your past history with the card. You could have anything from a couple of hundred to a few thousand dollars to spend. You should do your research for a credit card with terms that will benefit you and suit your spending habits the best; and with this advice on favourite credit cards for Canadians, you can compare suppliers based on their perks and interest rates. Managing your credit card well can help to boost your credit score; however, there are plenty of mistakes that could cause the opposite to happen. If you use a credit card but are not sure how to manage it well, it could become a huge financial risk. Keep these tips and tricks in mind to better manage your credit card and get the most out of it.

Use Your Credit Card for Necessities

Once you have been approved for a credit card, it can be all too easy to immediately view it as extra money to spend and go out and purchase something you have always wanted. However, it’s not usually a good idea to make these additional expenses using your credit card. Instead, to make sure that you are managing your credit card well, consider only using it for things that you were going to buy anyway, like groceries or gas. This way, you know that you are going to be able to easily clear the balance of the card as you will have the cash that you would have usually spent on these items.

Pay It Off in Full

The best way to use a credit card is to pay the entire balance off in full when it is due each month. While paying the minimum payment will keep you from getting any missed payments on your credit score, it’s not effective as you won’t pay off the balance very quickly, if at all, and lenders might view you as high risk if it seems that you cannot afford to pay any more than the minimum each month.

Change Your Payment Due Date

Most of the time, the payment due date will be set when you get the credit card. However, you can change it. There are several perks of changing your credit card due date to consider. When you change your payment due date, you can choose a date that is easier for you – for example, the day after your salary is paid. This way, you can avoid any issues with making the payment as you know that you will always have the money available.

Don’t Max Your Card Out

While the money is available, it’s a good idea to keep your credit card under the maximum balance at all times. Ideally, you should only use half the amount of credit that is available on your card at any one time. This is because using all your credit availability each month does not look good on your credit report. Lenders may view this as you relying too heavily on credit, which can make them reluctant to accept you for any further applications that you might make.

Do a Balance Transfer

Many credit cards offer introductory periods with little or even no interest for the first few months. If you have a credit card that you are looking to reduce the balance on or pay off completely, then a balance transfer card might be an ideal option for you. When you transfer your balance to another card, you can take advantage of the low interest rates and pay less for the duration of the promotional period, which in turn means that you can pay off more of your credit card.

Track Your Spending

It can be easy to put things on your credit card without realizing how much you are actually spending. If your credit card has an app, then it’s a good idea to download it as this will allow you to get notifications when you are getting close to your limit, for example. Tracking your balance and spending is important to make sure that you are not utilizing too much credit and are not at risk of going over your credit card limit.

Pay Early

You don’t have to wait until the day your credit card payment is due to make a payment towards your balance. Each month, your credit card issuer reports your account information to the three major credit bureaus including your balance, which is used to calculate your credit utilization, and this plays a huge part in your credit score. However, your card issuer could report the account information at any point in the billing cycle, which is why it can be helpful to pay down your balance early rather than waiting until your due date to pay the bill.

Set a Budget

Last but not least, it’s a good idea to set a budget for your credit card spending, especially if you have a generous limit. Not only will this help you avoid going over your limit and incurring charges, but it will also help you keep your credit utilization low. Ideally, you should set a budget that keeps your credit utilization under 30%. As mentioned earlier, the easiest way to do this is to use your credit card for things that you would have already been spending money on such as groceries, new work clothes, gas, or household products.

Getting a credit card gives you an extra line of credit to use towards purchases and expenses. However, without the right management, spending on a credit card could put you at risk of financial trouble. To keep your credit score high and use your credit card to your advantage, keep these credit card management tips in mind.