As you try and navigate through your finances during this pandemic, it pays to focus on how smart credit card use can keep you afloat. There is a big chance that your income is affected by this health crisis and this means you are going to run on a tight budget. This is a challenging situation to be in when you are already concerned about you and your family’s health.
One thing you have to understand is that it is a natural reaction for people to try and do their best to prepare. Especially so that no one has experience in dealing with a pandemic that is sweeping through the world. This need to prepare can be as simple as frequently washing your hands to feeling the need to stock up on supplies.
This is one of the reasons why you might have seen some shoppers filling up their carts with the essential supplies they need at home. This resulted in grocery aisles showing up empty just a few hours after they opened. While all this is happening, you need to focus on smart credit card use so you do not end up under a huge pile of debt. This is important as ABC News shares that about 16 million people already filed for unemployment in the first three weeks.
You will rely mostly on your credit cards for an extended period of time during this crisis. This is true since your income might not be what it used to be. There are ways to help you lower your expenses such as downgrading your lifestyle or reconsidering some expenses you can do away with at the moment. When it comes to your credit card use, here are some tips to help you manage it better.
Review the way you use your credit cards
Smart credit card use means that you need to review how you use your cards at present. Much like how you review your budget, you need to do the same for your credit cards. One place to look into is the recurring charges on your card. These are easier to spot and they are usually the items you rarely pay attention to.
This can be multiple movie or music streaming services you can cut down to just one or two. Look at what you use the most and stick to that. It does not have to be permanent since you can quickly take out and add streaming services when you want to. This flexibility gives you the option of sticking to a few and making changes as you go along.
You might also have other subscriptions that you are unable to use at the moment. You could be paying for a gym membership but haven’t seen the inside of your club for the past few months. It is high time you cancel that membership and explore other ways to keep fit. You can start with home exercises since it is still not safe to go out at the moment.
Consolidate your debts
Smart credit card use also refers to how you address your payments on your existing debt. The rule of thumb is that you need to pay everything off at the end of the month. This is so you do not get fined for high fees and penalties by your lender. That is why you should only charge what you can pay for in full every month.
If you have already accumulated a considerable amount before the pandemic, there is a good chance that you will be having a difficult time meeting your payments. One option you can explore is to consolidate your credit card debts. For one thing, this helps you manage your payments better as you focus on fewer accounts.
Debt consolidation also gives you the chance to make smaller monthly payments. This is possible if you consolidated using a card with a lower interest rate. There are times as well where you choose to pay over a longer period of time. One caveat with this approach is that you end up paying more at the end of the repayment period.
Use low-interest cards
As you slowly rely on charging expenses during this time, smart credit card use means you use low-interest cards the most. Doing so can help you keep your payments manageable during this time. It is best to stick to these types of cards so you can keep your monthly payments down. This can be a tremendous help when you are running short on cash.
Apart from looking at the interest rate of your credit cards, it is also a good idea to look at the existing rewards program each of them has. This can help you with your budgeting needs especially if you have cash back or rebates on your card. The more you use your card, the more you can save on your total amount spent.
Smart credit card use now includes making minimum payments
It is not advisable to only pay the minimum amount but if you are strapped for cash, this is better than not paying your cards at all. For one, non-payment on your card can prompt your lender to automatically assess fees, penalties, and interest. This can quickly put you in more financial trouble come next billing statement.
If you are running low on funds or simply trying to conserve your cash on hand, making minimum payments will make a lot of sense. Paying on-time even if it just the minimum amount will also give you the chance to manage your credit score during this time. This is important since you never know when you will need to rely on a decent score to take out a loan or open new lines of credit.
Monitor your credit card statement
Part of smart credit card use is paying close attention to your statements as well. You could be receiving an actual statement at the end of the month or an online copy. Whatever it is, you still need to conduct due diligence on it and make sure that you go through your list of charges one by one. This helps you not only understand the way you use your card but control it as well.
If you make it a habit to review your statement, it also makes you more proactive in identifying potential credit problems. You could be nearing your credit limit without you knowing it. This will make it more challenging to meet your payments every month. It can also go negatively against your score as you use most of your available credit.
One other advantage this brings you is that it lets you catch identity theft early on. USA.gov shares that thieves can use this to file taxes under your name, apply for credit, or even get medical services using your identity. Thieves usually start by charging a small amount on your credit just to check if it will go through. Once it does, they begin to charge bigger amounts under your name. This is why it is important that you check every detail of your statement. Once you find something you do not understand, give your lender a call to check it out.
Do not save credit card information on your gadgets
One tip that is helpful especially as you spend a lot of time at home is to never leave your credit card details saved on your devices. What this essentially does is make it easier for you to charge online purchases on your card. It easily fills out the fields you need to check out an item. If you do not have these saved, it gives you the chance to think about your purchase if it is really necessary or not. There are times when people would start to shop online just to cope with the stress this pandemic brings.
Smart credit card use during this health crisis can help you stretch your finances to cover more expenses over a longer period of time. It also keeps you out of unmanageable debt which will only further complicate your finances at a time when you need to have everything under control.