Our daily routines, including income flow and spending habits, have changed as a result of the pandemic. As we learn to deal with this new way of life, It is a good time for it reevaluate how we reconcile our finances and pay for daily needs. When you reach for your credit card, you are not alone.
The20th Review of consumer creditexplains that the average American carried a dollar5.313 Balance on their credit cards in 2020th. Here in Colorado, that number is a bit higher as the average credit card debt is around $5.625.
If you’re a new Colorado resident, you may already know that the cost of living here tends to be higher than other parts of the country. Compared to the national average, the costs are for energy, healthcare, food, housing, transportation and other life factors has climbed 12.5% higher for those in Denver 10.9% higher for Fort Collins residents and a whopping 28.9% higher for Boulder residents, according to.
No matter where they live, if you need a credit card Choosing the right type of credit cardto the yOur needs and spending habits are .Your credit card shouldcomplete your spending style and ultimately advantage our financial health.
All credit cards are not created equal. Everyone wears a number of variables affecting their use and payments. Some important details to look out for are rewards programs, interest rates, and introductory offers, Minimum payments, fees, fraud protection services, compatibility with mobile wallets, customer service options and partnerships with retailers. they have to choose which card it has characteristics that works best for you!
Here are five ways to choose and use credit cards wisely.
1. Stay informed about the benefits and processes of your credit card.
Credit card prices and rewards are constantly changing. Hence, it is a good idea to keep an eye on the current cards and rewards other comparable Offer cards. For example, if you use your card and they cash out every month, you probably want one Reward card. Decide which rewards are best for you (cash back, gift cards, retailer discounts, etc) and find the card that offers the best rewards in that category. Cash back rewards are very popular. Some cards only offer 60 cents per point, while others even offer $ 1 per point or more.
However, if you want to have some balance with you, watch out for the interest rate on the card. For balance carriers, this can lead to enormous savings. For example, if you have $ 1,000 in credit on a card with an interest rate of 20% and you do that Minimum payment from $ 30 every month it would take you 50 Months to pay out the balance and costs you $471 in interest over this period. In contrast, if you had the same $ 1,000 balance with a 9.99% Interest rate and you still only made the minimum payment, you would withdraw your balance in 40 Months and only pay $176 in the interest of this time.
2. Know how much you are going to be spend with interest beforehand You buy.
If you buy a product or service and can’t pay cash at the end of the month or can’t fully pay off the charges on your card, calculate the total cost of interest you pay based on the amount of one payment you can make. Do the math before you buy.
For example, suppose you buy an item for $ 1,000 and you know you can only afford the minimum payment you can make. Are you ready to pay the total additional interest on the item that you will receive over time? This type of calculation can quickly put the real cost of financing a purchase with a credit card into perspective. This could be a reason to switch to a card with a lower interest rate to make purchases more affordable. This can also be a reason to interrupt an unnecessary purchase or look for alternatives that are within your budget.
3. Read the rates and terms to understand the rates and charges associated with your credit card
Each credit card has fees, interest rates, and requirements that must be disclosed and is generally a separate document available on an advertisement or application. If you are considering a new credit card or already have a card but have never read the fine print, read the credit card terms and conditions in detail.
Most credit cards have different interest rates depending on the type of transaction. For example, using your credit card for cash advances or balance transfers can result in a much higher interest rate or fee than using it for purchases.
Your interest rate can increase if you miss payments. This can be in addition to late payment fees. If you have late payments, the best thing to do is to contact your credit card issuer to find out if your interest rate has been or is going to increase. You can save a lot of money simply by understanding how your card works and what factors affect your rewards and interest rate.
4. Protect your credit card information.
Security is a hot button issue especially for those who use their credit card to make frequent online purchases as we become socially distant and shop more from home. Our credit card team here at Elevations Credit Union have a few recommendations:
- Set up mobile wallets so you don’t have to deal with cards in person or transfer your card information. This also reduces the risk of credit card skimmers or website compromises.
- Never give credit card information over the phone to anyone who claims to be calling from your financial institution. Instead, contact the number on your card to answer any questions or concerns from the caller.
- Check your credit card statement every month. If you see charges that you don’t realize, investigate them and contact your card provider for assistance.
- Set up map notifications for your Elevation maps to monitor transactions and quickly and easily deactivate your map from your phone or computer.
5. Create your credit profile with a credit card.
For students and young professionals, using a credit card responsibly by making payments on time and managing balances helps build a solid credit history.
Later, when lenders assess your eligibility for a major loan, such as a car loan or a mortgage for your first home, the credit bureaus will share your financial history as a credit card holder.
Our financial spending habits, incomes, and needs are constantly evolving and changing. Credit cards can potentially help you manage your finances and improve your financial health for future purchases. If you are interested in a debt consolidation program to optimize your monthly credit card payments, read this post to find some options to get you started.
Do you have further questions about credit cards? Our team will be happy to help you answer. Contact us today by phone or online chat from the comfort of your home.