Finding Balance: Avoiding Stress While Using Credit Cards
We all react differently to stress. Right now, many of us are experiencing more stress than usual—specifically when it comes to our finances. During this time of economic uncertainty, some people become overly cautious with their spending. Others may gravitate toward spending more, indulging in “retail therapy,” through the convenience of credit cards and online shopping.
How to deal with financial loss
It’s more important than ever to choose a spending strategy that doesn’t add to your financial stress. It may be surprising to some that choosing a credit card, and using it responsibly, can actually have some positive results—like boosting your credit score, earning extra rewards and providing better fraud protection.
Next time you’re stressed about whether you should (or shouldn’t) use a credit card, keep these tips in mind:
Don’t overspend
It’s very easy to overspend when you don’t follow a budget. Not only can it cause stress, but it can also lower your credit score. If you typically avoid credit cards due to fear of overspending, a good rule of thumb is to “think debit, but use credit.” In other words, treat your credit card like a debit card. Make it even easier by setting up automatic alerts whenever your balance goes over a set threshold.
Keep this self-imposed spending limit below the recommended 30% utilization rate of your available credit. For example, if you have a card with a $10,000 limit, try not to carry a balance over $3,000. Utilization rates are one of several factors credit bureaus use to calculate your credit score.
To avoid interest fees, pay your bill in full before the grace period ends. A grace period allows you to pay off your balance within a certain timeframe withoutadded interest. As an added benefit, you can still earn rewardson yourpurchases.
Make it automatic
In addition to balance alerts, you can also set up automatic payments every month. Keeping your balance under your spending limit is a worry-free, hassle-free solution to keep your budget in check, your cards paid off and your credit score in a healthy range.
Find the right card for you
Whether you’re looking for travel rebates, cash back or all the above, there’s a rewards card that fits your needs. There are many ways to maximize your rewards points without paying a cent of interest.
To make the most of your rewards points, use your credit card for everyday expenseslike utilities, cell phone, gas and groceries. These budgeted items can really help your points add up. If you are used to using a debit card for the convenience of having an up-to-date checking account balance, try paying your credit card balance several times a month—even daily if you’d prefer.
When it comes to larger purchases, the best way to avoid additional stress is to work the cost into your budget and save for it. Then, use your credit card and pay off the balance right away.
If you don’t have a go-to rewards credit card already, look for one that offers special promotions or incentives for new cardholders. For example, Mountain America Credit Union is offering double rewards points from now through August31, 2020 for every purchase on our rewards card.
Monitor your accounts for fraud
Using a credit card creates an enhanced level of protection between fraud and your checking account—which makes it a great choice when shopping online, paying for gas at the pump, making large purchases and dining out. This good financial habit can also boost your rewards points total, which helps your money go further!
It’s also important to monitor your account for unauthorized charges. Most scammers commit fraud by stealing your account information, not the actual card itself. That’s why it’s important to keep tabs on what’s being charged or it could take a while before you realize something is wrong.
Sign up for automatic transaction alertsfor near-real time notifications every time your card is used for charges over a specified limit. If you’re a Mountain America member, utilize ourcard managertool tofreeze (and unfreeze) your card immediately if you suspect it has been compromised.
We don’t know if you can completely eliminate stress around your finances, but Mountain America is committed to educating our members, as well as the community, about the best ways to reduce it. Since we’re spending more time at home these days, we want you to focus more on enjoying your life, not stressing about your money.
