Smart Spending: Use Credit Cards Wisely

Credit cards may have an iffy reputation, but the truth is that they’re beneficial financial tools if you make wise choices. They can boost your credit score, bring some cash back, and generate rewards. Use them carelessly and you’ll pay for it—literally. Here are some best practices.

Maintain zero balances

Treat your credit cards like personal loans to yourself. Don’t spend more than you have. Carrying a balance means you’re being charged interest, which is money you don’t need to spend. Pay in full and on time every month to avoid this cost. If that’s not possible, at least submit the minimum or more so you don’t rack up fees. And mark the statement closing date on your calendar so you don’t forget to pay when the bill comes due.

Track your spending

Never treat your card like a bottomless pit, create a budget to track spending. Review monthly statements to figure out how often you’re charging, then determine where you can cut back. Also, look at the transaction history regularly and set up balance alerts that tell you when you’re nearing the established limit.

Don’t max out

If you’re consistently reaching your credit card limit, you’re either spending too much or your available cap is too low. Raising your limit is not a bad thing if you’re sensible about it. In fact, using less than 30% of your total available credit can improve your credit score, while repeatedly reaching a smaller limit can make a dent.

Avoid fraud

When you shop online, only enter your card information on reputable sites. Look for URLs that begin with https:// and have a green padlock icon next to the address bar, which means they’re properly encrypted. At gas stations, look for pumps nearest to the shop. Choose indoor ATMs when possible and always check for signs of tampering before inserting a card. If you suspect your card has been compromised, contact your financial institution immediately.

Get rewarded

Many cards offer rewards. Visa® Platinum from America First, for example, gives you 1.5% cash back on every purchase. Or you can get one point for every dollar you spend, redeemable for merchandise, hotels, flights, gift cards and more.

Using your credit cards wisely means you’ll earn more and pay less.