Make Your Momma Proud: Use Credit Wisely

Good morning, y’all! I hope your Saturday is off to a great start. I’ll be spending mine at work! 😊

I got to thinking about my secured credit card post from earlier this week and I feel like that endorsement should come with a word of caution as well.

 

Credit cards can be an awesome tool, especially if you’re trying to build or rebuild credit, but they can also be a slippery slope. We’ve all read horror stories of people who have gotten themselves up to their eyeballs in debt through irresponsible credit card use. In the process, they ruin their credit score and find themselves in debt they have no hope of paying off any time soon.

First, don’t let others’ stories dissuade from using credit to your advantage. If you’re worried about your own self-control, and your credit card is serviced through your local financial, you can always request a low limit. This can prevent things from getting out of control and I highly recommend this if you’re a young person and/or in college. There’s no reason to have a $5000 limit when you’re only bringing home, say, $500 a month.

If you’re new to credit use or if you’re working on building credit, the standard that you’ll hear is to use the card once a month for gas or groceries and pay it off at the end of the month. This isn’t a bad plan, but I have a better one. Instead of an unlpanned purchase, pick a bill (any bill!) and set up the automatic payment to be paid with your credit card each month. Once you see that the payment has fully processed, pay the card off immediately with the funds you would have used from your checking account.

After I’d had my secured card for about 6 months, there was a sale on at a store I loved, but you only got the sale price if you were a store cardholder. A friend said “why don’t you just try”. I did, and for the first time, I was approved for a line of credit immediately! I applied for my next card about year later and again I was approved. I have 6 credit cards at the moment and every last one of them is hidden from sight in my apartment, except for one (with lowest interest rate) which I keep on hand for emergencies. I choose to assign each of my subscription services to one of credit cards, that way the bill gets paid and my cards remain active without racking up a balance. Once you have that auto pay set up, leave your cards alone!

The more comfortable you become with credit, the more you can use it to your advantage like earning rewards points or cash back. I recommend using your card or financial’s website or app to keep track of your balance and make payments. I check into mine at least every few days. More and more frequently these companies are even offering a weekly update on your credit score, which is pretty amazing! (I still prefer Credit Karma, just because it allows me to track the balances on all of my cards and browse recommendations for my current credit situation.)

How comfortable are y’all with credit? Is there anything that makes you hesitate when it comes to credit cards?

Much love,

Zoe’

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