Make Your Credit Card Work For You

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Managing a credit card can really be rocket science for many people, and you’re probably caught right in the middle of that category! However, if you apply some very simple tips and techniques for managing and monitoring your credit card, you’ll find that it’s a very workable tool.

In reality, you don’t always have to work for your credit card. You can, instead, get your credit card to work for you based on how well you can keep track of things. In fact, if you pay attention to the trends of credit card owners, most people end up indebted because they simply don’t pay enough attention to the details!
Use these handy tips to make your credit card work for you:

1.Monitor your due dates.

• Know your due dates” means keeping track of when your credit card payment is due. Paying on time helps avoid late fees and possible interest charges.
• “Time your purchases” refers to when you make purchases in relation to your billing cycle. Credit cards operate on a monthly cycle, and any transactions made during that cycle will be included in your next statement.

For example, if your billing cycle ends on the 10th of each month, a purchase made on the 9th will appear on the current bill, meaning you’ll have to pay for it sooner. But a purchase made on the 11th will appear on the next cycle, giving you extra time before payment is due.

2.Make lump sum payments.

• Make big payments” refers to paying off a large portion of your balance before your credit card statement is generated.
• Your statement shows the amount you owe at the end of a billing cycle. If you pay down your balance beforehand, the statement will reflect a lower amount. This can improve your credit utilization ratio, which can be beneficial for your credit score.
• A lower balance means you can continue using your card for purchases or paying bills without worrying about accumulating too much debt.
• Many credit cards offer rewards like cashback or points for spending, so keeping a low balance while making necessary purchases allows you to benefit from those rewards responsibly.

Let’s say your credit card billing cycle ends on the 15th of each month, and you currently have a balance of $2,000.

• If you make a large payment, say $1,500, on the 10th (before your statement comes out), your statement will only show a balance of $500, instead of the original $2,000.
• This lower balance makes your credit utilization (the percentage of credit you’re using compared to your limit) look better, which can positively impact your credit score.
• After making that payment, you can continue using your card for bills or purchases, earning rewards like cashback or points, while keeping your debt manageable.

The idea is to reduce the reported balance before the statement is generated so that when lenders or credit bureaus see it, it looks more favorable.

3. Include interest with your minimum payment (If you cannot pay the entire balance).

This is about reducing credit card debt more effectively.

• Minimum payment: Each month, your credit card statement shows a minimum payment—the smallest amount you must pay to avoid late fees. If you only pay this minimum, the remaining balance continues to accumulate interest.
• Including interest with your minimum payment: Instead of paying just the minimum, the idea is to add the interest from that month to your payment. This reduces the amount of debt that keeps growing due to interest charges.

Example:

Say your credit card statement shows:

• Minimum payment: $50
• Interest for the month: $30
• Total balance owed: $1,000

If you pay only the minimum ($50), the remaining balance ($950) will continue to generate more interest. But if you pay $50 + $30 (total $80), you’ve covered the minimum and the interest, meaning less of your balance will be charged more interest next month.

Benefits:

• You reduce your debt faster, even if just a little each month.
• You pay less in long-term interest charges, saving money over time.
• While you won’t be completely debt-free right away, this method helps you get closer to settling your credit card balance.

Financial institutions are pretty competitive when it comes to the products they offer to customers. Therefore, you can easily find one that offers better rates and consider switching to that institution. Your credit card does not always have to be viewed as the enemy!

It can actually be a very helpful tool when financial needs arise, especially when those needs are totally unexpected. What matters most is how you manage the card and how well you do at
successfully repaying the debt.