Credit cards can offer many advantages. They let you carry less cash, shop online and pay for things with just a tap or a swipe. When used with care, credit cards can even help you build a healthy credit score.
Credit cards can also have some potential downsides. If they're misused, credit cards can lead to debt, fees and negative impacts on your credit.
So, how can you use credit cards to your advantage and avoid potential mistakes? The following tips may help you borrow smarter and use credit cards more responsibly:
#1: Build credit with on-time payments
Smart credit card use can help you build a healthy credit score. Good credit helps when it comes to qualifying for low-interest rate loans, renting an apartment and even applying for certain jobs! But if you're not careful, credit cards can have the opposite effect on your credit score.
Paying off your credit card balance on time and in full each month can help you establish a strong credit score over time. On the flip side, late payments can lower your score and lead to late fees. Not to mention, you'll have to pay interest if you carry a balance. To help avoid late payments, sign up for autopay or set notifications reminding you to pay your bill.
#2: Track your spending
Credit cards make purchases quick and easy — sometimes too easy! Because you're not paying for something the moment you buy it, as you would with cash or a debit card, you might end up spending more than you realize.
To avoid going over budget, monitor your credit card activity regularly. Most credit card companies offer an app or online account so you can track your transactions anytime, anywhere. Keeping a close eye on your activity is also a great way to spot signs of credit card fraud.
Another tip is to treat your credit card like you would cash or your debit card. This mindset will help you stay within your limits and only spend what you know you can afford to pay back.
#3: Shop smart online
For online transactions, credit cards are considered a more secure option over debit cards. Using a credit card provides layers of protection against fraud and makes it easy to dispute unauthorized charges.
As always, shop at reputable online retailers to prevent fraud. Look for “https" and the lock symbol in the address bar to ensure a website is secure.
#4: Get rewarded
Some credit cards come with extra perks, like cash back rewards on purchases. If you plan on using your credit card for everyday spending and pay your balance in full each month, a rewards credit card can be a smarter way to borrow.
As long as they're used responsibly, credit cards are a great financial tool that can make life easier and help you establish a stronger credit score! Be sure to track your transactions, pay your bill on time each month and keep your credit spending within your means.
Ready to start borrowing smarter? Visit Wright-Patt Credit Union's online Education Center to find more tips and tools to help you learn about credit and staying ahead of debt.