Ever wonder how a co-worker who probably makes less than you are able to take more vacations or afford a brand new car? It might be due to their savvy credit card habits. In theory, managing credit cards should be easy enough. Pay the full balance by the due date, don’t go over your credit limit, and the only charge as much as you can pay off each month. However, there are millions of well-intentioned credit cardholders who go deep into debt with what seem to be harmless swipes all the time.
The more you charge, the more your financing fees and monthly payments can soon affect your ability to pay other important expenses. Believe it or not, there are credit cardholders who have somehow learned how to charge and pay off in large sums to come out ahead. Here are seven smart habits of these savvy credit card users.
- Use software or apps for accuracy with hard numbers.
Even mathematically minded, high-volume chargers rely on technology to track where their money is going. Knowing exact figures is necessary to effectively run a household or business, as well as to accurately plan for your financial future. Savvy users utilize software credit management apps to track cash and credit flow in order to avoid over-borrowing.
You can use programs like Quicken to track your credit card receipts. Don’t let them build up, however. Enter them into your system as soon as possible.
- Earn as you charge.
It’s possible to use the system to your advantage, so to speak, by negating your interest payments with your credit card’s rewards programs. The most popular way to receive rewards is straight-up cashback, but other financial rewards can complement this incentive. For instance, you can have a retail card, such as a Target card, giving you cashback on purchases and a Visa card with a cash-back program, which you can link to an investment account.
- Repair your credit.
As we’ve already determined, new borrowing can negatively affect your credit if not handled wisely. Ensure that your debt-to-income ratio is low enough to take on a new card or another loan so that you don’t damage your credit with more debt. Instead, take steps to repair your credit by making all of your payments on time.
If you feel you would like to put your existing credit status in the hands of professionals who understand how to repair credit, make sure you research companies with a proven record of helping people improve their credit score.
- Prepare for unforeseen expenses.
The thing that trips up your average cardholder the most are costly emergencies that fall outside their ordinary expenses. These surprises can require charging up credit cards if you don’t have the extra cash to cover them. Instead, savvy cardholders can better weather the ebb and flow of unforeseen expenses by not depending solely on their credit cards for emergencies.
Your credit card payment is a monthly expense you can currently afford, but without an emergency fund, it may soon be more than you can handle.