Unfortunately, high balances often lead to difficulty maintaining minimum payments and safeguarding your credit score. Before you come close to getting into credit card trouble, learn how to spot these early warning signs from the NFCC and take action:
Check your credit card usage regularly. Keep an eye on how and when credit cards are being used each month. If there is an increase in the number of times a credit card is used for purchases that had been covered in the past with cash, it could be a sign that you’re using credit to fill gaps in your budget. Instead of charging more often, look for ways to cut back to keep expenses in line with your cash flow.
Keep an eye on your balance. Each credit card comes with a credit limit. Your goal should be to keep the balance as low as possible compared to the limit. This makes payments more affordable and helps avoid running the risk of incurring costly penalties for overcharging. Stay out of trouble by paying off balances as quickly as possible, either all at once or by paying more than the monthly minimum payment.
Count your cards. Make sure plastic isn’t taking up too much space in your wallet. Federal Reserve data shows that Americans with credit carry nearly four credit cards on average. Most experts advise carrying less than that. If your number of cards is on the rise, consider consolidating. This makes it less stressful to keep track of payments and balances, which helps make debt management easier.
Source: The National Federation of Credit Counseling
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