When you’re in debt, it can seem impossible to get out of the hole. You might have a mountain of credit card bills piling up and not know how to pay for them all or just want an easier way out. But here’s the thing: there are ways to use credit cards responsibly without going into debt. The trick is by using your credit cards strategically instead of impulsively, which will help you save money and build your credit score at the same time. In this blog post, we’ll go over some tips on how to do that!
Interest rates on credit cards are designed to trap you into a cycle of debt. The companies know that they will make more money in the long-run if their customers carry balances from month-to-month instead of paying off their purchases at each billing period, so it is important for consumers to be aware and take action against this strategy by choosing low APR credit card offers or even going interest free with some balance transfer options.
Beware: only use your new purchase with one swipe without thinking twice about whether making such an impulse buy was worth potentially being stuck in ten years’ worth of payments!
If you choose responsibly when using your credit card then there’s no need to pick one based on its APR (Annual Percentage Rate).
Credit cards can be a great way to make purchases without having the funds available on hand, but they are also one of the most expensive ways. The interest rates add up and cost you more money that could have been avoided if you just had enough cash for your purchase in first place. If it’s too high though, there is another option: Paying off your balance every month makes paying with credit card pointless because then all transactions would incur no APR whatsoever!
Always Pay Off Your Credit Cards in Full
Every month, you have the opportunity to reap rewards and accumulate money with your credit card by paying it off in full. However, if you don’t pay your balance in full every month or carry a balance from one transaction period into another when interest is applied on that unpaid amount of debt, all these benefits evaporate as they are outweighed by the costs incurred because of high-interest rates.
Maintain a Low Balance-to-Limit Ratio
With your credit score in mind, it’s important to keep a low balance-to-limit ratio. The closer your current balance is toward the limit on what you can spend at one time, the fewer points towards improving that number you can earn. You want them high enough so they’re not too out of reach for good interest rates and other offers; but if there are already plenty of opportunities available when applying for loans or lines of credits – then by all means go ahead and enjoy those rewards!
FICO scores work differently than VantageScore scoring models though with different terms like utilization rate versus debt percentage (percentage). What might have been 30% before may now be 20%.
You can use your credit card as much or as often you like, but it’s important to be aware that with a higher balance-to-limit ratio comes lower scores. If this would affect the amount of interest on any loans for which you’re applying–like mortgages and auto finance–be sure not to make large purchases before taking out those types of loan. Otherwise, the high rates could cost you hundreds more in interest over time!
Don’t take this statement meaninglessly: You should avoid using your credit cards too frequently or making big transactions because they’ll negatively impact your score (thus increasing what might otherwise be low APR). But don’t worry so long as there are no plans for major borrowing ahead.
Do Not Skip a Payment
Credit card companies often offer “skip a payment” programs, which allow you to go an entire month without paying off your credit debt. It’s tempting for consumers who need access to capital at the holidays and may not be able to pay it back right away due in part by high interest rates or lack of funds– but this option is never worth taking because when opting into these plans, one simply postpones their payments instead of putting them on hold until they can catch up with themselves again. By skipping that monthly installment towards their balance, those people are actually adding more months onto how long it will take before they have fully paid down everything owed- meaning there is going to be even longer amount of time where interest accumulates so much quicker!
If you’re skipping a payment, the last thing on your mind is probably what other people think. But I’ll tell you this: they are already judging and seeing things in their own way- so there’s no point to making it worse!
Instead of just letting everything go into default, which may not be an option for some cases but for others can end up being better than expected if done strategically; simply pay off any outstanding balance as soon as possible with all interest rates waived until next month like usual.
If you have not been keeping a good credit score and want to find out what else you may have done wrong that’s negatively affecting your credit score, contact us for a complimentary credit analysis phone call.