Credit cards provide a convenience that makes shopping easy. However, spending also becomes easier when you have credit cards and that can get you into debt faster than you might think. Managing your credit card spending will not only allow you to avoid debt, but also help you build an excellent credit score. Here are our five easy tips to help you manage your credit card spending.

1. Lower Your Credit Utilization Ratio

   Your credit utilization ratio (CUR) sounds a little scary, but simply put it compares your credit card balance to your credit limit. So, if you have a credit limit of $5,000 and the balance you are carrying is $2,000 your CUR is 40%. Anything above 40% percent is considered high. Keeping to 30% and below is your best bet, as it allows you to have some money available on your credit card should an emergency arise, while keeping your credit score looking good to potential lenders. Anything above 40% will negatively affect your credit score and be spending a lot more on interest. Always avoid the temptation to spend more when your bank raises your credit limit. This will help keep your CUR low and assist with your credit management.

2. Pay Off your Monthly Balance

   It can become very easy to choose to pay the minimum required payment on your credit card, as it keeps more cash in your bank account. Unfortunately, not only does this tend to keep your CUR higher, but it will also cost you in interest. This makes it more and more difficult to get that balance paid. Your best bet for credit management is to always pay your monthly balance off in full.

   You should never be spending money on your credit cards that you can’t afford to pay off that month. This means you are spending more than you earn – a major credit no-no. If you have a high-interest credit card, this is even more detrimental. A good strategy, in this case, is to apply for a low or no interest card. Most cards offer low or no interest to new customers for a limited number of months. Use your new card to pay off your high-interest account, and then you can pay off as much as your budget allows each month to reduce the ratio and cut down on the interest you’re paying.

3. Use Rewards

   With so many rewards programs available today, it makes financial sense to choose a card that offers points. You can then leverage those points to improve your debt situation. The best thing to do with points when possible is to opt for cash back, and then apply that cash to your credit card balance. You can also use your points to buy items that you would need to purchase anyways — this way, your points will take one thing off your plate that you’d have to pay for otherwise. Understanding what’s available through your rewards programs will allow you to take full advantage of your points.

4. Set a Monthly Spending Limit

   Instead of taking advantage of the spending limit on your credit card each month, set your own. Look at your budget and determine how much you can afford to spend each month. This will ensure that you have the funds to pay off the balance each month and start with a clean slate, so you never waste money on interest charges.

5. Set up Alerts

   You can set up alerts that not only let you know if there’s been a potential security issue with your credit card, but also to warn you when you are spending more than you’ve budgeted for. This can provide you with reminders that you are approaching spending above your budget while keeping your credit card safe from fraudulent spending.

If you’ve found yourself in need of credit management we can help. Click here to contact our debt management experts.