4 tips for effectively managing your credit card during difficult times

Let’s face it, life as an adult can be downright expensive and frustrating, especially during tough times like these. While your credit card has likely provided some additional freedom and flexibility lately, both in your personal and financial life, it’s important to remember that your credit card is not free money. You will have to pay it back eventually! 

With U.S. credit card debt hitting a staggering all-time high of $930 billion earlier this year, according to the latest data from the Federal Reserve Bank of New York, it’s clear that we could all probably use a little refresher on how to effectively use and manage our credit cards – myself included. For that, I turned to my colleague, Pamela Redleaf, a personal financial associate at Highmark Federal Credit Union, who regularly works with Highmark’s members to educate them on the importance of properly managing their credit cards and finances. 

Here’s some of the important advice and tips she had to share with me: 

Always pay your credit card off ahead of time. 

There are a number of reasons you should always pay your credit card off ahead of time, according to Pamela, but the most important is to avoid interest payments. Accounts that are paid-in-full are given an interest-free grace period, which usually lasts until the next due date. If you can’t pay in full, be sure to pay as much as you can, as far ahead of the due date as you can, in order to reduce your interest payments and make room for other needs and potential emergencies, she said. 

In addition to avoiding interest payments, paying your credit card off ahead of time can also help to improve your credit score as it reduces the amount of your credit limit you use, also called your credit utilization. This, along with payment history, can account for up to 65% of your credit score. 

Don’t overextend yourself or your wallet

You should avoid maxing out or spending anywhere near your credit limit, Pamela advises, as it could cause long-term financial issues, including fees, debt, and damage to your credit score. A good practice is to always use less than 40% of your available credit. She recommends treating your credit card similar to a debit card or checkbook. If you don’t have the money currently or can’t save to pay it off later, that should be a sign that you can’t afford to make a purchase. 

CONSTANTLY monitor your balance 

If you’re using your credit card for everyday purchases, it can be easy to forget how fast those day-to-day transactions can add up, Pamela says. That’s why it’s essential to regularly monitor your balance. One of the best ways to do this is to download your credit union or card issuer’s mobile app and put it front and center on your phone’s home screen. By doing so, the app will serve as a consistent reminder to check your credit card balance. Also, if available, be sure to set up weekly account balance updates/notifications that can be sent directly to your phone or email. You can often do this right from the mobile app, or through your online account. Or, like me, consider creating a monthly calendar event on your phone that reminds you to make your payment. 

Make sure you’re taking advantage of rewards/benefits 

Lastly, Pamela strongly encourages that you take full advantage of any rewards or benefits programs offered through your credit card. From gift cards, cash back, and electronics to entertainment and airline miles, the right credit card can help you save money on the places you visit and things you do most. If you’re contemplating a new credit card, make sure to choose the credit card that best suits your needs and lifestyle. 

There’s a lot of responsibility and management that comes with a credit card. If you find yourself constantly in trouble with your credit card, don’t be afraid to lock it in a drawer and use only your debit card or cash. Just make sure not to close it, as doing so could negatively impact your credit score. Additionally, don’t be afraid to shop around for better interest rates and balance transfer promotions, especially if you consistently carry a balance from month to month. Pamela says your local credit union is always a great place to start!

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