We all know that that little plastic cards can wreak havoc on budgeting, but did you know that when managed correctly, credit cards can actually benefit your finances? Building a good credit history can help you when it comes to a variety of different things such as buying/leasing a car, renting/buying a house, and even get you perks with your bank.
I use my credit card as if it were a debit card, monitoring my cash flow in and out to ensure that I’m not overspending, but this can prove hard for a lot of people if it isn’t something you are used to. A good way to start out building credit in a safe and manageable way is to pick two or three things that you will use your credit card for, and nothing else. Pay them in full, on time, every month, and you will easily build credit without much effort at all. I suggest picking things like cable/internet, electricity, and monthly insurance payments, which don’t fluctuate much (if at all) to ensure that you have the funds to completely pay them off and don’t put too much on the card at once.
Aside from building credit, many cards have benefits such as cash back, travel points, or money to spend at retail locations. Do your research and see what option is best for your lifestyle. If you are someone that frequently flies on one airline, perhaps getting one of their credit cards would be most beneficial; or if you shop at one store a lot, get one of their cards. Target and Nordstrom in particular have fantastic credit options, giving you a percentage off and/or points towards money to spend in the store with every purchase. If you don’t frequent any store in particular, the safest bet is to go for cash back. This can be deposited in either checking or savings accounts, and is a no brainer way to benefit your finances. Costco is another great option because you get a credit card and membership bundled into one, creating even more bang for your buck.
The best way to go about this is to educate yourself. Ask around to get information on the different options out there, and choose what works best for you. All it takes is a bit of planning and management for you to transform your bad credit habits into beneficial financial strategies! Remember, credit cards can actually benefit your finances when utilized correctly