I can’t say I have always been great with credit cards. In my early twenties, I saw them as ways to get stuff I wanted (not needed) when I didn’t have the money. While I kept my spending (mostly) under control, I was still relying on credit cards to get me to the next paycheck. As I started to learn more about managing my money and building my credit score, I started to see credit cards as a tool for helping me create a stronger financial standing – as long as I used them strategically. Here are a few ways you can do it too.
Consolidate Your Debt
If you’re paying on multiple credit cards, find a balance transfer card with little to no interest rate. If you put all of your debt onto one card, you won’t be paying multiple interest rates. And, if you can find one with 0% APR for a given amount of time, you won’t be paying any interest rate.
Build Your Credit Score
If (and only if) you can control your spending, don’t close your accounts. The more credit you have available to you, the higher you can get your score. This does not mean go out and get more cards (that can bring your score down because opening too many accounts at once is a bad sign). It just means don’t close the accounts you already have. Instead, use them sparingly and with small charges. Keeping your accounts active shows good credit behavior. Every now and then, charge something small to your card. Make sure you have the money in your account to pay it off quickly.
If you don’t have a credit card already, consider a low-limit card. The low limit will keep you from going overboard, and having different kinds of loans (student loan, mortgage, credit card) shows that you can handle a variety of debts.
Reap the Rewards
Use your card to build reward points, earn cash back, or get miles for your next adventure, which can help you save money.
These strategies only work, of course, if you use your cards responsibly. And that means managing your debt and not over charging your card. That may mean using your card only when you have the means to pay it off that month. If you have a large amount of debt, pay that off first or these strategies won’t help you at all. The snowball method is a great way to pay off your debt.