If you are spending more money than you make, or are barely able to pay all your bills at the end of each month, consider decreasing your financial obligations by refinancing, selling items you don’t need or picking up a second job to help you get ahead.
We’ve all heard the expression that “money can’t buy happiness” but we can all agree that being able to meet your financial obligations and still have some money left over for savings, presents or a special treat for yourself can give you some peace of mind.
How do we get caught up in this shell game of bill-paying each month?
Most likely, it’s because we overspend on our credit cards. It’s important to understand that credit cards are an important financial tool, but they need to be used responsibly.
Here’s how to know you’re okay.
- You can easily pay more than just the minimum payment each month. In fact, if you pay the amount of money you put on your cards each month, you won’t be in debt.
- You don’t rely on your credit card for everyday purchases.
- You are using less than 30% of your credit limit.
- You never take out cash advances. The extra fee for cash advances can be 3-5+% and that’s on top of the regular interest rate.
- You use it mostly for large, necessary expenses that are unexpected.
- You read all the fine print in every letter you receive from your credit card company.
When is it better to use a credit card over a debit card?
Credit cards are safer to use than debit cards because the money isn’t taken from your bank account immediately. Imagine your debit card is scammed by a card reader and the perpetrator charges hundreds of dollars on your debit card?
Yes, your credit union will assist you and won’t charge you for the bad charges, but it could still take up to 72 hours for you to get your money back into your account…and what it you didn’t notice the card had been scammed right away? It would take that much longer before you’d get use of your money.
When is it better to use a credit card over cash?
Credit cards can be safer over money when you need a lot of cash to cover a purchase. Not everyone wants to carry $1,000+ to buy the iPhone you’ve been looking to buy or a new piece of furniture, etc.
So, next time you think about using your credit cards, consider whether you are buying something you need or something you want, and can you afford to pay for it out of your bank account today.
Interested in applying for a new credit card with a low interest rate? Check out our options today - https://www.mccoyfcu.org/loans-and-credit-cards/.