Loading...
BYH, they are paving Dickinson Avenue!!! I thought I would not live long enough to see that street get paved. Thank you!...

Financial health: Use credit cards responsibly and gain a financial tool

112016AnneFisher.jpg
Loading…

Anne Fisher

Sunday, November 20, 2016

Credit cards often are compared to power tools. Used responsibly, they can be a very effective financial tools, but when used improperly, they have the potential to be dangerous and destructive.

According to a 2015 study by NerdWallet, the average American household has $15,675 of credit card debt, and the average household is paying a total of $6,658 in interest per year (including credit cards, mortgages, auto loans and other consumer debt), which is 9 percent of the average household income ($75,591) being spent on interest alone.

How can you avoid the credit card pitfalls and mountain of debt that plague the “average American,” yet take advantage of the true benefits of using a credit card? How can you use a credit card as an effective financial tool? The following five strategies can help you boost your credit rating, budget more effectively, and avoid the stress and overwhelming credit card debt with which so many Americans struggle.

1. Pay off your balance every month.

Charge only what you can afford, and pay your bill in full every month. This is challenging, but it is the only way to avoid getting into credit card debt, and the only way to avoid paying interest on your purchases.

2. Never skip a bill, and never pay your bills late.

Pay your bill every month, even if the minimum payment is all that you can afford. Missing a payment could result in late fees and higher interest rates and a negative impact on your credit score. Most issuers charge a hefty late payment fee. Also, 35 percent of your credit score is based on your payment history, so missed or late payments can wreak havoc on your credit rating.

3. Use your credit card as a budgeting tool. Using a credit card to pay for day-to-day expenses is a smart idea if you live within your means and pay off your bill every month. By making all of your purchases with a credit card, you can see exactly how much you have spent each month. Log into your online credit card account frequently (at least once per week) to help you track your expenses and stay aware of how much you have spent so far during the billing cycle. Most online credit card sites offer a spending analysis tool. This allows you to see a breakdown of how much you are spending with your card in different categories (restaurants, groceries, travel, clothing, etc.). This can provide some helpful insights into where you are sticking to your budget, and where you might need to cut back.

4. Stay well below your total credit limit.

In order to keep your credit score healthy, keep your balance well below your credit limit. The credit utilization ratio is the percentage of the total available credit that you are using. Credit issuers like to see a credit utilization ratio of approximately 35 percent or less. For example, if you have a credit limit of $5,000, a 35 percent credit utilization ratio would mean that you have a balance of $1,750 or less. Set up balance alerts with your credit card company so that you receive a text and/or email whenever your total spending hits a certain threshold that you have set. You don’t want a situation where you are close to maxing out your credit limit. This could hurt your credit score.

5. Use credit cards with reward program. If you use a credit card for the majority of your daily purchases, find a card that offers rewards such as cash-back, hotel loyalty points, or frequent flyer miles.

You can earn some great financial perks just by using your credit card for regular expenses such as groceries or gas. Make sure that your credit card purchases are for things that you would spend money on anyway, though, not luxury or frivolous expenditures.

Using a credit card responsibly requires a lot of self-discipline, but the resulting financial benefits and peace-of-mind make it well worth the effort. Following the tips above will help you to make your credit card a very effective financial tool.

Anne Fisher teaches in the Department of Finance in the College of Business at East Carolina University.

Loading…

Humans of Greenville

@HumansofGville

Local photographer Joe Pellegrino explores Greenville to create a photographic census of its people.

Business

May 06, 2018

On December 22, 2017 President Trump signed into law arguably the most significant reforms to our tax code in the past 30 years.

While the majority of the law focused on stimulating economic growth through changes to the corporate tax code, there are tax cuts in the law for you and me as well.…

Jim_Nelson (3) (1).jpg

April 29, 2018

One of the more timely economic statistics is unemployment insurance (UI) claims.

The UI claimants are a subset of the total number of unemployed. They help us understand the magnitude of layoffs and help measure the difficulty experienced by job-seeking workers.

The data for North Carolina, which…

Kleckley.jpg

April 26, 2018

A former Telegram publisher was among those honored by The United Way Tar River Region on Wednesday during its 11th annual Community Champions’ Luncheon.

The banquet, held in the Dunn Center on the campus of N.C. Wesleyan College, was attended by many organizations and people across the Twin…

042618communitychampion01

April 22, 2018

For many of us, the word “budget” evokes overwhelming dread and a vision of giving up all of our favorite splurge items. A budget that makes you account for every single dollar you spend can seem suffocating. However, budgeting is essential for paying bills on time now, and for planning…

Anne Fisher (1 of 1)_pp.jpg

April 15, 2018

The American dream is to own your own home. Renting is often viewed only as a necessary step to that end, and the quicker you can achieve that dream the better.

The knock against renting seems to stem mostly from the premise that you are throwing your money away when you rent. When you rent, you do…

Len_Rhodes (002).jpg

April 08, 2018

While at a family get-together the other day, I walked up in the middle of a conversation between two cousins. It seems that the wife of one of the cousins had “just tapped” the bumper on the front passenger side of his pickup truck while backing out the drive way two days before.

The…

Len_Rhodes.jpg

April 01, 2018

Everybody from advice columnists to counseling experts offer advice on how not to argue about money.

A quick search of the Web turns up thousands of articles, videos, and other information on how to keep harmony in a relationship when talking about money. With all the advice, counsel, guidance, and…

Mark_Weitzel.jpg

March 25, 2018

The national average cost of a wedding day in 2016 shot up to $35,329, according to a survey by The Knot. That's a jump by $2,688 from the 2015 average of $32,641.

I don’t know about you, but as the father of three daughters I find that statistic deeply troubling. That is a lot of money…

Mark_Weitzel.jpg

March 18, 2018

With the tax cuts passed by Congress in December 2017, the nonpartisan Tax Policy Center estimates that 65 percent of households will see higher take-home paychecks and 6 percent will see lower paychecks.

As excited as you might be to see larger take-home paychecks, it is critical to check and…

Thanh.jpg

March 11, 2018

Many years ago, if you wanted to buy a home and needed to borrow money for the purchase, you would go to your bank or savings and loan association and speak to the local loan officer.

The loan officer there already knew you, as well as your parents, grandparents and where you worked. After a few…

Danny Harrington.jpg
15 stories in Business. Viewing 1 through 10.
«First Page   «Previous Page        
Page 1 of 2
        Next Page»   Last Page»