Using Credit Cards Wisely

So you’ve been eyeing that shiny new grill or 65-inch LED TV from a large online retailer. Maybe you don’t have all the funds at this time or maybe you just don’t want to tie up all your cash with such a large purchase. That’s where a credit card may come in handy. A credit card can be a great tool to increase your purchasing power, allowing you to borrow money to purchase items at the point of sale.

But if it isn’t used wisely, your credit card purchasing habits could negatively affect your creditworthiness, or a financial institution’s willingness to let you borrow money in the future. That could mean difficulty getting financing to buy a car or home, getting approved for another credit card or even prevent you from being hired for certain jobs—yes, some employers do check candidates’ credit history.

Here are some simple ways you can use credit cards wisely.

Make Your Payments On Time
There are many reasons for paying your credit card bill on time—you avoid late fees and additional finance charges, your interest rate typically won’t increase, your credit score may improve—all of which result in keeping your credit card in good standing.

Pay More than the Minimum Balance
Yes, paying your credit card bill each month is a good thing. But what happens when you only pay the minimum balance? If you have a balance of $3,000 with an annual percentage rate or APR of 20 percent and a monthly minimum payment of $25. If you pay that each month, it would take 145 months—that’s 12 years—to pay off. Not to mention, you’re looking at paying more than $3,000 in interest charges. If you can, save time and money in the long run by paying more than the minimum balance.

Be Careful with Store Credit Cards and Deferred Interest Plans
No interest until 2020 sounds great! But if your payments are late or you don’t pay off the balance by the end of the deferred interest period, you may have to pay all of the interest you deferred from the purchase date. The APR can be as high as almost 30 percent. That could definitely put a damper on your budget. Make sure you read and understand the terms of the offer and devise a plan to pay off the balance before the deferred interest period ends.

Use Online Tools
Most credit card companies now have online tools accountholders can access to track spending, get balance alerts, view monthly statements and make payments. Receiving your statements online and using online billing can help protect your financial information from being stolen from your mailbox. It’s also greener with less paper to shred. And tools that help you track your spending make it easier and more convenient to stick to your budget and avoid overspending.

Hillcrest Bank provides a comprehensive suite of personal and small business rewards credit cards with features such as the ability to earn a point for every dollar spent, bonuses on all points earned every month, cash back and more. Plus, Visit hillcrestbank.com for information.

-Adrienne L., Marketing Specialist

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