9. Don’t Use Credit to Pay for Credit
Many people use their line of credit, which has a much lower interest rate, to make their credit card payment each month. Or they may apply for a credit card with a low promotional interest rate and do a balance transfer to pay off their higher interest card. While this might reduce how much interest they pay initially, it opens the door to getting deeper into debt with more available credit.
If you do want to take advantage of a balance transfer and pay less interest, close the credit card account you transferred from and focus on paying off the account you transferred to before the promotional period ends. But be warned – the payments could be a lot more than you can afford. Regardless how you pay your bills, get help if you’re not able to pay your account off within a few months or find that you’re using it to pay for regular living expenses.
10. Make Sure Your “Rewards” Are Worth It
Credit card reward programs might seem like a sweet bonus, but keep in mind that they also entice you to spend. The trick is to take advantage of rewards and loyalty programs without letting them influence your purchasing decisions. It really comes down to never buy something just because it will give you points.
Be aware of the terms and conditions of your card holder agreements, as well as how the reward programs work. It can be easy to collect points but it may have been less expensive to purchase the reward item outright, especially if you end up paying interest on your purchase. There’s also the chance you’ll lose your rewards if your account ends up past due.
4 Ways to Tell If Reward Credit Cards are Worth It for You
11. Build Credit Without Going into Debt
Using a credit card responsibly is a great way to build credit. If you’re worried that you’ll overspend, don’t use the card for shopping. Instead, set up one pre-authorized charge for a set amount each month, such as a gym membership, and then lock the card up. You’ll still build a positive credit rating because the account is being used, and you’ll know that it fits your budget because you’ve planned for that expense. But by not carrying the card with you the temptation to overspend will be a step removed.
12. Reward Yourself
Staying disciplined with your money can be hard, and it’s important to keep yourself motivated. Find reasonable but meaningful ways to reward yourself when you use your credit card wisely and don’t end up in debt. For example, make a deal with yourself that if you pay off all of your credit card bills for 2 months straight, you could splurge with dessert after a meal, a favourite drink, or a small item you’ve had your eye on. But instead of adding to your next bill, you could also reward yourself through inexpensive activities like taking a hike, going sightseeing in your local area, having an at-home movie night with friends, or finally enjoying that book you’ve been meaning to read. It can be tough to stick with your plan, but staying out of debt allows you to reach your goals and that’s something to be really proud of!