Whether you are going through bankruptcy or trying to improve your credit afterward, you need to be smart about using your credit cards. Although they provide you with spending flexibility, especially if you are strapped for cash, failure to pay your balance in full at the end of the month can harm you in the long run.
The following are several tips to follow to use a credit card responsibly:
- Make your monthly payments – Rather than require you to pay your bill in full every month, credit card companies will provide a minimum payment by a specific due date. If you fail to pay the minimum in a timely manner, not only will you be subject to a late fee on your balance, but your credit score will also go down. If you have a habit of forgetting the deadline, check if you can schedule automatic payments to cover the monthly minimum payment.
- Be frugal – Since credit cards act like loans, it can be difficult to restrain yourself from making large or even extravagant purchases. Please discipline yourself from overspending and only pay for things you could afford in cash. Also, create a budget and do not deviate from it.
- Only make big purchases with your credit card – On the other hand, if you use your credit card every time you purchase something, the expenses can really add up. This is how many people quickly get into credit card debt. You may only use your credit card for big purchases. The best way to do this is by saving up money for the purchase, buy the item with your card, and then immediately pay it off. If you have a rewards card, you can reap all the benefits.
- Get a rewards card – Leading into this next point, rewards are one of the major benefits of using a credit card. Common examples of credit card rewards include cashback, redeemable points, travel miles, or other benefits. Why not earn some money back each time you spend it?
- Lower your limit – To ensure you avoid going into tens of thousands of dollars in debt, why not lower your credit limit to a manageable amount. Keep in mind, it is wise to keep your balance lower than 30 percent of your total limit for building your credit score.
If you are interested in filing for bankruptcy in Northbrook or within the surrounding area, contact Bach Law Offices, Inc. today at (847) 440-5998 to learn how our firm can help you!
