FINANCIALLY SPEAKING

{ SHIFT+CONTROL }{ A SPECIAL TRIBUTE }{ FINANCIALLY SPEAKING } YOU ARE ENOUGH. HOW TO MAKE YOUR CREDIT CARDS WORK FOR YOU

BY NICOLE HEROUX WILLIAMS I PHOTOS BY NSP STUDIO BY DAWN KELLOGG

According to the Federal Reserve, 74% of all purchases in the US are made with credit cards. Americans are masters of using them. However, the same cannot be said for paying them off. The average American household carries approximately $6,270 in credit card debt.

That said, when used responsibly, you can make your credit card work for you and reap benefits including cash flow flexibility and reward perks. With discipline and planning, you can incorporate simple habits that will let you reap benefits without the dangerous downsides.

Here are some things to keep in mind when you are applying for and using credit cards:

Credit Score – There are 5 factors that determine your credit score: payment history, how much you owe, length of credit history, types of accounts you have, and recent credit activity. 35% of your credit score is based on your payment history. By spending only what you can afford and paying your bill in full and on time every month, your credit card can help you sustain a higher credit score.

Every time you miss a payment, you negatively impact your credit score. Pay your bill in full and on time - Paying your bill in full and on time will also help you avoid interest charges and late payment penalty fees. You can even pay a few times a month if it helps you stay ahead. It’s so easy to set reminders about payment due dates as well as set up payments automatically or ahead of time.

Stick to a Budget – You can use your credit card for purchases as a complement to your budget until you have worked through your predetermined spending limits. This is a great way to help you stick to your budget, but you can also earn rewards for purchases you would be making anyway. Credit cards offer tools on their websites to track spending.

Restrict Yourself – We’ve all received those letters in the mail informing us that our credit limit has been raised. This can make it very tempting to be prolific in the way that your card is used. If you are worried that you might overspend, you have the power to lower your credit limit to something that is manageable on a monthly basis. If you don’t want the company to change the limit, set a limit yourself and then put the card away until the next month, or until you pay the card off.

Rewards – People who master the art of taking advantage of credit card rewards really know how to make their cards work for them. Cash-back, loyalty points for hotels, and frequent flyer miles all can be earned just by using your card for regular expenses. It’s important to keep track of when these rewards and make sure that you redeem them before they expire. So many credit card users don’t track reward points and miss out. interested in credit card rewards, you can still receive the benefits of a card. Some of the best credit cards out there offer perks such as free travel insurance, price protection, extended warranties, exclusive discounts, and more. Even if you already have a credit card through an issuer, it’s worth checking the website periodically for updates on reward offers.

Additional handy tips:

• A common credit card benefit is purchase protection, which allows consumers to file a claim with the issuer to receive replacement, repair, or reimbursement for any eligible stolen or damaged items. This is a perk that you have when you purchase an item using your credit card. Check with your card’s issuer for more details.

• Log in to your account once per week or every few days in order to stay on track with your spending.

• It’s easy to slide into credit card debt when those little purchases add up, so use your card for big purchases instead. Here’s a trick – save up for your big purchase in cash first. Then, after you make the purchase with your rewards card, you’ll have the money to pay for it right away and get the rewards as well. Alternatively, make the big purchase, then pay if off over a few months under a strict timeline, knowing that you will have to pay some interest.

The perks and rewards of credit card usage can be amazing, but only if you balance spending with discipline and good sense.

“The perks and rewards of credit card usage can be amazing, but only if you balance spending with discipline and good sense.”

The Summit has a great summertime offer for new cardholders. Get a new Summit Visa card and take advantage of a limited time, low introductory 1.95% APR for the first 6 months. Visit summitfcu.org/newcredit for more details. Specialist for The Summit Federal Credit Union.