How Can I Keep My Credit Card Balances Low?
- June 23, 2021
- By: Greenpath Financial Wellness
When you keep credit card balances low, you are on the path to make the relationship you have with your credit cards a mutually beneficial one.
Life happens. It might not be always possible to keep credit card balances low but when you know the options, it is possible to benefit from the spending and borrowing power you need for purchases while managing balances and interest charges.
When you pull out your credit card and use it, you’re actually borrowing money.
The cost of borrowing that money is the interest rate. Keeping balances low can lower your costs for auto loans and home mortgages. Remember, the higher the credit score, the better your interest rates.
To keep credit card balances low, stick to the tried and true tips as you review your account each month:
1. Know Your Credit Limit
A good rule of thumb is to keep your balances below 30 percent or less of your credit limit. Many people find that increasing their minimum payment can help pay the card down — even if it is just an extra $50 a month.
2. Plan Your Payments
This is the most important part of your credit experience. Maintaining a budget and making sure you make payments ahead can improve your payment history and your credit score. You can also set reminders for payments or automatic payments. If you need help with Debt Management, GreenPath can provide specific options that meet your situation.
3. Stay Aware of All Accounts
Many people find it helpful to review their credit report to keep longer accounts open to immediately pay off small amounts on an account to keep it going and to prove creditworthiness.
As noted, using credit cards wisely is an important part of money management, plus helps you build up your credit history.
Online and in-person retailers encourage credit card use to make it easy for their customers. To keep it workable for you, be sure to track your spending habits to keep those large impulse purchases in check.
If you need more assistance on ways to keep your credit card balances low, see more tips to manage credit card debt.
Credit Report Review
Sometimes life throws us a curveball, and it might be a challenge to keep credit card balances low.
GreenPath’s NFCC-certified credit counselors can walk you through a free review of your credit report. We’ll explain how to read the report and how credit scoring works, and answer your questions.
Together we’ll make a plan for managing your credit score to support your goals.