Credit cards can be beneficial in difficult situations or lead to significant debt. Here’s how to use them wisely within a budget.
With rising inflation affecting our purchasing power, many have turned to credit cards more frequently. By the end of 2022, credit card debt soared to $986 billion, with the average individual carrying $5,805. As interest rates climb, maintaining debt has become increasingly costly.
Breaking free from debt can be challenging, especially if you haven’t learned to use credit cards effectively. Studies reveal that 43% of individuals with credit card debt are unaware of their interest rates, and 65% think maintaining a small balance monthly boosts their credit score (it doesn’t!).
Starting with the fundamentals is essential. What guidelines should you follow to build your credit? How can you manage escalating debt? And how can you incorporate credit cards into a balanced budget?
Jennifer Streaks, a seasoned finance journalist, shares insights on these pressing topics. She has reported on personal finance for various major outlets and authored “Thrive! Affordably: Your Month to Month Guide to Living Your Best Life Without Breaking the Bank.”
Through her reporting, Jennifer highlights common financial struggles faced by Americans and the emotional factors contributing to increased credit reliance. Beyond inflation, the pandemic-induced pause in life has led many to engage in “revenge spending.” Tune in to learn how to manage these feelings without overspending.
We also clarify prevalent myths and misunderstandings about credit cards. Jennifer discusses how many cards are truly necessary, the appropriate usage for each, and the critical importance of never missing a payment, even if it's just the minimum. She offers advice on how to approach your credit card issuer for assistance — you’re not alone! You might secure a late fee waiver or a reduced interest rate by presenting your case effectively.
“Everything is negotiable, especially for valued customers,” Jennifer emphasizes.
We explore various strategies to expedite debt repayment. Jennifer explains why the avalanche method is her preferred approach and how a balance transfer card can significantly cut interest costs, provided you pay off your debt within the promotional period.
Understanding what affects your credit score is crucial. We detail the components of that elusive three-digit number, the recommended frequency for checking it, and where to access this information for free.
In our Mailbag, we address inquiries regarding transitioning to Medicare and compare HSAs with FSAs. In Thrive, we provide simple food swaps to help save during inflation.
