If you’re a chronic spender like me, listen up. It turns out that taking out multiple lines of credit and racking up colossal mounds of debt isn’t good for your credit score, or your personal finances in general. Who knew? In all seriousness though, problem credit spending is something many Americans are all too familiar with these days. Sometimes, there just aren’t any other options to get by. Often though, we’re simply too careless with our spending and budgeting. Here we offer three ways to practice better credit management that should hopefully keep you from finding yourself up to ears in debt:
- Don’t Open Multiple Credit Lines
If you’ve already got two or more credit cards, chances are you should stop right there. Especially when it comes to reward cards from specific retailers, opening multiple lines of credit can be burdensome and even dangerous. While they may claim to offer awesome rewards and perks, they usually won’t do much in the way of boosting your credit score; these cards are easily forgotten about, and as such, are not very useful for common day-to-day purchases.
It’s much wiser to stick with one or two main credit cards to keep your bill payments under control and easy to monitor. Having to worry about multiple cards won’t do you any favors in the sanity department either.
- Pay Balances in Full
Although it’s fairly obvious, it’s surprising how hard this practice can actually be. Paying your balances off in a timely, consistent manner though is the best way to maintain a high credit score. If you have an especially large outstanding balance, getting it paid off as soon as possible, in full, is another great way to boost your credit score as well. If balances are left unpaid, they’ll not only hurt your credit score, but will accrue greater interest over time, making it that much more difficult to get out of that financial hole.
- Use a Prepaid Credit Card
If you’ve got numerous outstanding balances on other cards, a change in your credit approach once you’ve paid these off may be in order. Using a Green Dot prepaid Visa credit card, or other similar prepaid card, is a great way to ensure that you don’t end up in a terrible financial situation.
With a prepaid card, you are able to maintain a line of credit while also building your score without having to worry about creating an outstanding balance as you can only spend what you put on the card. Another benefit to a prepaid card is the lack of interest rate, instead users just pay a $4.95 maintenance fee a month. Otherwise, there are no other fees associated with the card allowing you to build your credit without having to worry about high interest rates, overspending, or calling creditors. In other words, this is a great training credit card for anyone who may have experienced irresponsible spending in the past.
No matter your financial situation, practicing and maintaining good credit habits is something we should all strive for. The unfortunate reality of credit cards is that they’re easy to use and just as easy to abuse. By heeding these three tips, and in researching some other great ways to practice safe credit usage, you can make sure you stay on top of your finances and out of messy, stressful debt troubles.