How to spend responsibly with a credit card

Credit cards are a great tool to help you build credit, earn rewards on everyday spending, 

and gain some extra flexibility when you need it. But if not managed carefully, they can also lead to overspending that can hurt your credit score and put you in debt. The key to credit cards is using them with intention. Here are some tips and best practices to help you manage your credit card responsibly.

Spend on your credit card like you have the money to cover the purchases

One of the perks of a credit card is having a high credit limit you can use to make purchases that you might not have the money for today. It can be tempting to spend up to your available limit, but that’s an easy way to get in trouble and hurt your credit score. Experts recommend keeping your credit card balance to under 30% of your credit limit to protect your score, but an even better practice is to only spend what you can realistically afford to pay back. A good rule of thumb is to make purchases that you could also pay for today with cash.

Instead of seeing your credit limit as extra spending money, picture your credit card as an extension of your budget – think groceries, gas, utilities, and streaming services.

Using your credit card for everyday purchases can be a smart habit as long as you stay in your budget and spend within your means. 

Make payments on-time by automating your payments

Life happens, and when life moves quickly, it can make it easier to overlook payment due dates. Making on-time payments is critical with a credit card, as it signals to lenders your riskiness as a borrower. An overdue payment can hurt your credit score and cost you in the long-run with higher interest rates.

Setting up automatic payments or calendar reminders is an easy way to help you stay on track and avoid pesky late fees and missed payments. This means one less thing to remember each month.

Small habits like automatic payments can often make the biggest difference over time.

Pay more than the minimum amount due

Most credit cards will allow you to make a minimum payment amount towards your statement balance. While this can be helpful when funds are tight, paying only the minimum due will result in longer term interest expenses and can put you further in debt. Instead of paying the minimum balance due, try to pay off as much of your statement balance as possible (if not the entire balance). Doing so will save you money and help you manage your overall debt. 

Make a plan for larger purchases

Sometimes large expenses can’t wait. Credit cards can be a great option to help cover the cost and offer a flexible repayment option. It may also be worth comparing your credit card interest rate to a personal loan rate to make sure it’s the best option. Knowing how much you can pay and comparing the payback costs between a credit card and a personal loan can help you decide which option is best for making a large purchase.

Review your credit card account regularly

Checking your account a few minutes every week could help you:

• • Stay within your budget.
  • Act on unfamiliar transactions quickly.
  • See recurring charges.
  • Know the amount you’ll owe before payment day.

Make sure to download your credit card issuer’s app to track card activity in real-time, and set up alerts to track your card activity.

Build habits that support your goals

No one is perfect, and being a responsible credit card user doesn’t mean using your card perfectly. It’s truly about building consistent, healthy habits to help support where you want to go.

Making on-time payments, keeping within your budget, and paying more than the minimum balance due are ways to help avoid unnecessary interest charges while continuing to build your financial foundation for the future.

Find a credit card that fits your goals

If you’re after a lower rate or getting rewarded for purchases, the right credit card should help support your financial goals, not overcomplicate them.

Everwise offers credit card options built to help you move forward. Explore credit card options, find the right card, and take the next step forward.