Credit cards are a financial tool that can help you get ahead if appropriately used. They can also lead you into a vicious cycle of debt if you’re not careful. If you weren’t thrilled with your credit card habits last year, the new year is the perfect time to re-assess your credit card use and make sure you’re using your cards to their full potential.
Here are six ways to get the most out of credit card spending in 2023.
Find the right credit card
Step one in maximizing the benefits of a credit card is to choose the one that’s best for you. You’ll want to consider things like sign-up bonuses (which may include a lump sum cash benefit, multiplier on rewards points, etc.), rewards (like cash back or travel points), and interest rates.
The best card for your lifestyle is the one that will reward you for spending you’re already doing. For example, a travel rewards credit card may make sense if you travel frequently. But if the vast majority of your spending is on groceries and restaurants, then a food and dining-oriented card may be a better option.
If you’re brand new to the credit card game, take time to research how to get a credit card and review the many options available, paying close attention to interest rates, credit score requirements, and card perks.
Know your card’s rewards
Many credit cards offer cashback or rewards for spending in certain categories, like groceries, online shopping, travel, or gas. However, even if you open a credit card for great rewards in a specific category, some creditors change the highest-earning retailers or categories monthly or quarterly. Staying updated on these changing rewards helps ensure you’re getting the most money back in your pocket each month.
Discover your extra card perks
Some major credit card companies offer perks beyond just earning cashback or travel miles. For example, cards may cover rental insurance, airport freebies, purchase protection, and more. If you’re not sure what kind of perks your card provides, reach out to your credit card company. Understanding and using these rewards is an extra benefit that can save you more throughout the year.
Pay your card in full each month
Credit cards can cause problems for the average consumer if you do not pay off the balance due each month. Rapidly accumulating interest can make it challenging to get back to a zero balance. Simply making it a point to spend within your means and paying the card in full can save you from the dangers of slipping into a cycle of debt.
Choose a spending limit
It’s effortless to spend money using a credit card, which is why it’s necessary to be responsible about how much spending you’re doing. Get the most out of your spending this year by intentionally setting a limit in advance. To choose a spending limit, look at each of your current spending categories, like gas, food, and clothes. Then, create a limit that makes sense without being overly restrictive.
Set up spending alerts
While you may be using your credit card often, you’ll also want to monitor to ensure your card hasn’t been compromised. With identity theft becoming commonplace, well-placed spending alerts and push notifications can tell you when a transaction is processed. Then, you can quickly work with your creditor to shut down the card and refund the transactions before it causes damage to your credit score.
The bottom line
When used correctly, credit cards can help you get ahead financially. Practice good credit card management by finding the right card, understanding rewards and perks, paying your card in full, setting a spending limit, and enabling alerts. Above all, keep your credit card spending in check to avoid getting into a situation where you’re unable to pay the balance due and end up accruing unnecessary interest.