Tips for credit card spending

Thousands of hardworking Americans face financial pressure every day of their adult lives. Their precarious monetary balance can be upset by significant life events such as job loss, demotion, divorce, home repairs or medical emergencies. Unfortunately, unexpected expenditures can send a family toppling toward financial peril. What can be done to prevent catastrophe?

While dramatic events can lead to financial peril, one of the most common causes of overwhelming trouble is credit card debt. Here are five ways to control credit card spending:

  • Keep your credit utilization ratio low: The relationship between your credit card balances and your aggregate spending limit is called your credit utilization ratio. Individuals should aim for a 30 percent ratio – a $1,000 balance on a card with a $3,000 limit – to avoid a negative impact to the credit score.
  • Pay your credit card in full each month: The best way to keep your credit utilization ratio low is to pay your balance off each month. This can also help you control your spending. If, over the course of the month, you keep track of your credit card use, you will only spend as much money as you know you can pay off.
  • Leverage credit card rewards: Many people ignore the various benefits provided by different credit cards. Whether there is a cash-back bonus, miles accumulation or discounts at various types of retail, it is crucial that you take advantage of the rewards offered to you. Many people choose to apply their cash-back bonus right toward the credit card balance.
  • Consider setting a monthly spending limit: As we hinted at earlier, carefully budget your credit card spending according to your disposable income. This way you are not surprised by your month-end statement and can pay the bill off without hesitation.
  • Set up spending and security alerts: In recent years, many credit card companies have improved their fraud detection systems. It is wise to customize various alerts and regularly interact with the security features available on your cards.

Preventing financial disaster can often seem like a never-ending chore. Once you build these positive habits, though, controlling your spending can become second nature. With these habits in place, you can regularly check your credit score to note what action seemed to have the greatest positive impact.