Credit card management is the umbrella term for keeping tabs on your credit card. That applies to spending, making payments on time, monitoring usage, and more. Credit card management might seem simple, but it’s essential to your long-term financial health.
If you’re reading this, you’re probably one of the more than 191 million Americans who have credit cards. The majority of American adults have at least one, and most credit card users have more than that. Many people use their credit card as their primary way to purchase things. In fact, in the third quarter of 2021, American credit card balances grew by 17 billion. While using a credit card wisely can be a great way to pay for things conveniently and build credit, they can also often be overused.
That’s why knowing how to manage a credit card is essential for anyone who owns one. With the right tricks, keeping tabs on your card doesn’t have to be hard. And in this post, we’ll walk you through the basics that you should keep in mind if you’re planning on using a credit card.
Here’s what we’ll cover:
What Is Credit Card Management?
Credit card management is the practice of keeping tabs on all your credit cards, including key features like your current balance (or balances), recent activity, payment due dates, debts, interest rates, and rewards. Credit cards come with a lot of information to keep in mind; that’s where credit card management can help.
Why Is Credit Card Management Important?
Credit cards are a really helpful tool for many different situations, whether that’s financing a large purchase or just online shopping. However, it’s also critical that credit card users actively manage their open accounts. Poorly managed credit cards can lead to bad financial outcomes, like credit card debt and dings on your credit score. If you have a habit of badly managing your credit card, it can make it much harder to get new credit cards in the future, as well as other types of loans.
Need a break from your credit card debt? Check out our post on credit card debt relief for more info.
5 Tips for How to Manage a Credit Card
There’s no doubt that managing your credit card is important. But you might not know what the most important steps are. Here are 5 tips that you can follow to keep yourself on track and responsible, no matter what you use your credit card to purchase.
Tip #1: Always Pay By the Due Date
The Federal Trade Commission, which oversees and regulates many financial products like credit cards, recommends that the most important thing you do is pay your balance by the due date. Credit cards charge interest. That means that, if you don’t pay off your full balance, the remaining amount will increase at a certain rate (that’s your interest rate). Paying off your full balance, not just the minimum, is the only way to avoid paying interest.
It’s also important to maintain a strong credit score. Credit scores are essential to your financial wellbeing. Your credit score is basically a measure of how trustworthy lenders think you are. The higher it goes, the more likely you are to be approved for a loan in the future—especially loans with better terms. Credit card payment history makes up 35% of your FICO® Score, making it essential to have strong credit.
Tip #2: Learn the Conditions and Vocabulary
When you get your first credit card, it will come with documentation outlining the terms and conditions of your account. While you don’t have to read the small print in one sitting or in one day, it’s crucial to go over it as soon as you get the card in your hands. Break it down section by section so you know exactly what you have access to and what your credit card company expects of you.
It’s also a good idea to remember the following vocabulary terms:
- Some credit cards impose a yearly fee, called an annual fee, for the privilege of conducting business with them.
- The annual percentage rate (APR) is the fee you’ll pay if you don’t pay off your amount in full.
- The amount of money you have charged to your card at any particular moment is known as your balance.
- A cash advance is a short-term cash loan that you can get through your credit card.
- Your credit limit is the maximum amount you may charge on your card.
- A grace period is a period during which you will not be charged any additional costs.
Tip #3: Determine When You’ll Use Your Card
Will you only use this card in an emergency? Expenses for travel? What about auto repairs? Shopping excursions for groceries? What about gas fill-ups? Before you start using it on a daily basis, figure out what your own boundaries are.
It’s possible to wing it, but you don’t want to start doing so without any guidelines or personal boundaries. Begin with increasing modest expenditures such as gas or groceries while familiarizing yourself with how everything works. You want to make minor purchases that you can pay off quickly before each payment cycle ends.
Many credit cards provide interest-free promotions for at least 12 months, depending on the type of card.
While it may be tempting to spend as much as possible in the hopes of paying it off later, you don’t want to fall into this trap. Determine what recurrent bills are manageable for you to pay on time, for example, to create a solid credit history. Assume you spend less than $100 each month. To create good financial habits, make a payment for the full amount on or before the due date.
Tip #4: Always Monitor Your Credit Card Activity
Take the time to examine your credit card bills and/or charges online, as there are so many options to do so.
Not only are you ensuring that each transaction is legitimate, but it also allows you to see precisely where and how your card is being used. If something doesn’t appear to be correct, call your lender right away to get it corrected.
When it comes to managing your cards and keeping track of your credit card activity, Mint users have an advantage: you’ll be able to utilize the app to track different categories of expenditure, giving you a bird’s eye perspective of what your credit card is being used for—whether by you or a fraudster.
Tip #5: Manage Any Debt Responsibly
You’re essentially taking out a modest short-term debt when you use a credit card. The loan’s terms state that it must be repaid at the end of each month. When you don’t pay off your credit card bill each month, debt builds up. Even if you make the smallest payment—usually a fraction of the total amount, such as $30 or $50—interest will begin to build on the remaining balance. Credit card debt may have a serious impact on your finances over time. If you find yourself with mounting credit card debt, it’s critical that you have a plan for dealing with it. Use Mint’s credit card payoff calculator to figure out your payoff timeline and make a plan.
Is There an App that Manages All Your Credit Cards?
There is a credit card manager app! Mint allows you to see all your credit cards, as well as any other financial account, in one convenient place. You can monitor your balance, view recent purchases, compare purchases with your budget, and even monitor suspicious activity all from one convenient place. It takes just a few minutes to input the information, then we can handle the rest, connecting with your credit card companies to make sure we have the right, up-to-date info on your spending and balances.
If you’re curious about how to manage your cards through Mint, check out our informative post on how Mint works.
What Is the Best Way to Manage Credit Cards?
The best way to manage cards is carefully and actively, preferably with a simple app-based solution like Mint. There’s no one-size-fits-all strategy, and your credit card management strategy will likely have to work closely with your general budgeting strategies. However, by following tips like those outlined above, you’ll be in a much better place when it comes to keeping tabs on your credit and credit cards.
Manage Your Credit Cards Responsibly & Reap the Benefits
Credit card management is essential to financial health. Credit cards make modern living quick, efficient, and easy—plus many credit cards come with perks and rewards. However, reaping those benefits requires you to always keep a careful eye on the way that you use your credit cards.
With tips like those listed above and helpful app-based tools like Mint, it’s possible to wisely use your credit cards and reap the rewards!