Financial Education

I love using credit cards! They make purchasing online, in stores and while traveling simple. Some cards offer reward programs that provide additional incentive; plus, they allow you to track your spending.

But, there are downsides you can avoid if you plan ahead and manage your repayments so you don’t find yourself swimming in credit card debt.

I learned from making mistakes of my own that credit cards are not an extension of your wallet.  Meaning if you can’t afford to pay in cash, then credit cards are not a good option to make purchases.

Here are my five things to avoid with your credit card.

Not tracking of spending. Using plastic is extremely efficient but sometimes it’s too easy. You don’t want to be caught off guard at the end of the month and realize you spent way more than you should have.

Never go over the limit. Not only will you pay over the limit fees, but it is also terrible for your credit score to carry high balances.

Leaving balances on high interest cards. Rewards and cash back are great if you pay off the balance each month. But, if you don’t pay them off – the interest rates are SKY-HIGH.  Transfer those balances to your low-rate WCCU card which will cut your rate in half.  All balance transfers to your WCCU card come with 2.99% apr for six-months with no fee!!

Never pay just the minimum or miss a payment. Missing a payment is going to incur fees but also greatly impact your credit score. I recommend paying more than the minimum because credit cards are typically the most expensive type of financing.

Don’t use a credit cards to fund a large purchase. As mention earlier, credit cards are typically the most expensive form of funding, so avoid using them to fund large purchases. You are much better off financially making larger purchases by refinancing a car or with a home equity loan, those rates are as low as 2.99% apr verse 10% at the best for credit cards.

Good luck managing your debt – one thing is certain – if you can, your odds of financial success greatly increase.