8 Tips for Using Credit in Uncertain Times
8 Tips for Using Credit in Uncertain Times
Avoid the temptation to spend more than you should when using credit cards.
By Navy Federal | March 5, 2020 | Tag(s):
When money’s tight, those plastic cards in your wallet sure seem tempting. But charging a little here and there can lead to big trouble if credit isn’t managed wisely.
Keeping Credit in Check
The best—and potentially worst—thing about credit cards is their convenience. It’s just so easy to swipe, insert or scan when you won’t feel the hit until the next billing cycle. But too much debt is tough on your monthly budget. It could also damage your credit score, making it harder or more expensive to borrow money for a home or new car.
Here are eight tips for controlling credit card spending:
- Create a credit card budget. When you work on your monthly budget, include a line for paying credit card debt. Decide how much you can charge each month and stay within the limit. Remember to include any automatic payments you may have set up on the card.
- Keep track. Consider using a spreadsheet, mobile app, online tool or just a piece of paper to track your credit card spending each day. Keep a running total for the billing cycle.
- Review your statement each month. It’s crucial to verify your credit card statement is accurate so you can report any fraudulent charges quickly. (Navy Federal Credit Union has a Zero Liability policy for unauthorized transactions.)
- Maximize monthly payments. In an ideal world, you’d pay off your credit card balance each month. If that’s unrealistic, pay as much as you can. Set a goal—say, paying double the minimum or an amount you can afford that’s higher than the minimum—to keep interest costs down. And, if you set it up to pay automatically, you’ll never have to worry about missing a payment.
- Rethink your purchases. If you’re tempted by that great purse or the latest electronic gadget, give yourself a few days to cool off. You may find that your eagerness to buy whatever it is has faded. Consider your subscription costs as well for streaming services or apps.
- Have two cards. Divide your spending between two different cards—one for small, everyday purchases and one for larger purchases. Make sure you pay off your “small purchases” card in full every month. Or, similarly, designate one card for your regular bills (think cell phone, gym membership and/or streaming services) that don’t change, and auto-pay it in full each month, while using another card for variable bills like groceries and dining out. This will help you budget by creating “buckets” for your different expenses.
- Go card shopping. If you’re using high-interest-rate credit cards, consider transferring balances to a lower-rate card. Navy Federal Credit Union offers a range of credit cards to suit your needs, whether you’re looking for a lower rate, no annual fee or earning rewards.
- Consider using cash. Think about giving yourself a weekly allowance in cash for small purchases, like coffee or gum. Studies have shown that people spend up to twice as much on a purchase when using a credit card instead of cash.1
Get Help If You Need It
Keeping on top of credit card debt is one of the best ways to remain financially fit. If you do find yourself overwhelmed with debt, Navy Federal offers free financial counseling.
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NARRATOR: Navy Federal Credit Union. Credit cards.
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Using credit cards wisely.
Here are four simple things you can do to make a credit card work for you.
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An animated green credit card spins onto the screen.
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1, limit the number of cards you have.
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A dotted line connects a blue numeral 1 in a white circle to an image of three credit cards in a white circle. The three credit cards appear individually, and two are crossed out.
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You may want a card that offers rewards for everyday spending, but don't open more cards than you can manage and pay.
2, have a repayment strategy.
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A dotted line connects a blue numeral 2 in a white circle to a blue dollar sign in a white circle. A balance scale has a weight marked Card Balance on the left and three stacks of paper money marked $200 on the right.
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It's a good idea to pay off the balance each month.
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A check mark appears on a smart phone with a dollar sign and a Pay Now button. To its right is a meter marked Credit Score, its needle moving between orange in the middle and green on the far right.
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But if that's not possible, pay more than the minimum payment. Setting up automatic payments means you'll never have to worry about late payments. It's a good strategy for building and improving credit.
3, think before you use your card.
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A dotted line connects a blue numeral 3 in a white circle to a silhouette of a person in a white circle. The person has a thought bubble with a question mark.
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That credit card in your wallet can make you think you have more money than you do.
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Coffee cups stack up next to a credit card.
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Even small purchases like your daily latte add up fast.
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A dotted line connects the credit card, the stack of coffee cups, and a blue dollar sign in a white circle.
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4, track your spending.
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A smart phone shows a dollar sign on its screen.
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Mobile banking, budgeting apps and online tools make it easy to watch your budget.
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A hand holds a smart phone which sprouts two speech bubbles, the left with a calculator and the right with a credit card. Then a mallet marked Credit strikes the pad of a carnival strength tester game, causing the bell at the top to ring.
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You can even set up alerts to let you know when you're getting close to your credit limit.
Let's review.
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Each of the four steps is rewritten in a checklist.
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1, limit the number of cards you have. 2, have a repayment strategy. 3, think before you use your card. 4, track your spending.
A credit card is a great tool for building credit and making purchasing easier as long as you use them wisely.
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Three credit cards spin onto the screen, and a speech bubble with a smiling yellow face appears over them.
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Our members are the mission.
For more information, visit makingcents.navyfederal.org. This is not a commitment to lend, and conditional/subject to the verification and accuracy of the information submitted to Navy Federal.
This video is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.
NFCU. Copyright 2020. Federally insured by NCUA.
1Source: Forbes.com
This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.