While credit cards get a bad rap for being easy to misuse, they can also be good tools for monthly financial management. Daily use of credit cards, for instance, can be great ways to earn free money for doing the things you normally do. The simple idea is to charge expenses on the card, and then pay them off with the money you would have otherwise spent in cash.
But keeping this use under control is key. Here are five important ways you can do just that.
1. Limit Your Credit
Begin by limiting the amount of credit available on the card. Based on your monthly income, choose a card with as low a limit as possible. You might even start with the minimum offered and only increase it as you learn more about your usage.
2. Use Few Rewards Cards
Rewards cards make daily use credit cards a financial bonus, but this method works best when you focus your usage. Because rewards are based on bulk transactions, they will build up to useful amounts only if you pick one or two of the best options and stick with them. Avoid the temptation to add other cards into your rotation, as this dilutes the savings.
3. Stick to a Budget
Budgeting is just as important — or sometimes more so — when using a credit card as when using cash. A lack of cash will stop you from getting into too much trouble, but a card allows you to overspend. Decide in advance which charges you want to place on the card and stick to it. Maintain a budget and avoid allowing yourself to violate it while using the card.
4. Consider Weekly Payments
Modern credit card users have the advantage of being able to see and track their charges immediately. Use this by paying off those charges more than once per month. Don't wait until the statement arrives. Instead, pay off each week's transactions at the end of the week. You will develop great habits and never find yourself wondering how to pay the card later.
5. Keep It Simple
The simpler your credit card usage system, the better you can manage it. If you opt for a bank or credit union card, for instance, it's an organic part of your banking and you can use the same portal and institution. Pick a card whose program and terms you understand, then design a system for yourself to control it in a way that seems intuitive for you. This increases your chances of success.
Where to Start
Want to know more about choosing and using a credit union credit card? Start by meeting with your bank, credit union, or financial institution today. Then you can start building good financial habits that will benefit you for a lifetime.
