page title icon 5 Simple Steps to Managing Your Credit Cards

October 22, 2022

Credit cards can be a powerful financial tool and a great way to make purchases. However, they can also be the source of major headaches if you don’t use them wisely.

Many people use credit cards without knowing the basics about how they work and what happens when you carry a balance from month to month. Learning these few things will help you manage your credit card responsibly and avoid costly mistakes. Excessive credit card debt can cause major problems for the future of your finances, so it’s important to know how to manage your credit cards properly.

You may not realize that carrying a balance on your card costs you money in interest charges each month until it’s too late! Interest rates vary depending on the type of card you have, but let’s say your card charges a 15% Annual Percentage Rate (APR). That means if you owe $1,000, then over a year, this will cost $150 in interest alone. And if that doesn’t seem bad enough, many companies also tack on penalty fees for paying late or going over your limit- which could be $35 or more per transaction.

It’s easy to see why using a credit card responsibly is crucial – especially with all those high costs involved. But don’t worry – there are plenty of ways to keep yourself out of trouble while still enjoying all the benefits of using plastic.

Credit Cards

A credit card is a form of unsecured loan that can be accessed by the holder and used to pay for goods or services. Banks, credit unions, or other financial institutions typically issue this type of loan. These entities collect the debt from consumers in the form of payments every month with interest rates attached to them.

Credit cards are one of the most popular types of consumer debt in existence today, with over 176 million people in the United States owning at least one of these plastic lending products.

There are many types of credit cards available on the market today, including travel rewards cards, cash back rewards cards, balance transfer cards, student credit cards, and more. 

With all the different varieties out there, it can be difficult to decide which will suit your needs. The best way to find out which type of card you should get is to ask yourself what your goals are when using this new card. Will you use it mostly for traveling or just as a convenient way to make purchases without having cash? Will you carry a balance or pay it off every month?

Each card has its pros and cons, but understanding these features will help you make an educated decision.


Interest rates on credit cards are among the most important factors when deciding which card to apply for. The interest rate will determine how much you pay in interest over the life of your loan and can have a significant impact on your finances.

When comparing credit cards, you certainly want to find one with a low interest rate if you ever plan to have your balance carry over from month to month.

After years of unscrupulous lenders hiding the actual cost of borrowing, the Truth in Lending Act requires lenders to disclose the APR and other important details clearly and in an easy-to-understand manner.

The APR is the true cost of borrowing on the credit card – a lower APR means that you’ll pay less in charges over time. The APR considers the interest rate and any fees that you may have to pay on the credit card. This fact makes the APR the best way to compare two cards side by side and make sure you’re getting the best deal when it comes to interest.


One important thing to know about credit cards is that they are a way for companies to make money. They do this by charging you with fees and interest rates on purchases, cash advances, balance transfers, etc. If you think about it this way, understanding the basics of credit card fees can help you manage your finances better.

The most common fees are:

  • annual fee (fee charged every year for the ability to use the card)
  • over-the-limit fee (applied when you exceed your predetermined credit limit)
  • cash advance fee (charged when using funds from a checking account or savings account to pay for a purchase)
  • late fee (charged when the payment is not made by the due date)
  • balance transfer fee (charged when you move your balance from one card to another one)
  • foreign transaction fee (charged when you make a purchase in another currency)
  • returned payment fee (charged when you make a payment on your credit card and they reject it for insufficient funds)
  • card replacement fee (fee charged by credit card issuers when you need to replace a lost or stolen card)

Certainly, the best way to avoid paying these fees on your credit card is simply to pay off your balance in full each month. If you can’t manage this strategy, then it’s a good idea to check your statement each month and make sure you’re not being charged any unexpected fees.


As opposed to interest and fees, rewards are a good way to earn cash, points, or miles on your credit card. They give rewards for various behaviors, though usually for making purchases.

Common rewards that you can take advantage of include:

  • cash back (as a percentage of the purchase price)
  • extra money back on groceries or fuel (as a percentage of the purchase price for grocery stores and gas stations only)
  • points per dollar spent (for example, you may get one point for every $20)
  • miles per dollar spent (you might earn two miles on a purchase of $25).

Some cards will also give points and rewards for hotel stays or will have limited-time promotions that offer bonuses when you spend a certain amount in order. Further, some cards offer double or triple points or miles during certain times of the year, usually around holidays or travel seasons.

Finding a card with a good rewards program is particularly useful if you do not carry a balance over to the next month on your card.

Debt Management

Debt management is simply a way of paying off your accumulated credit card debt. Debt management is for everyone, though it can take many different forms. Let’s look at some of the best ways to handle your credit card debt.

Create A Plan And Follow It

If you are trying to reduce your credit card debt, there is nothing more important for you to do than implement a debt management strategy.

The first thing you need to do is figure out how much credit card debt you currently have. You can find this amount on your statement combined with any interest charges that may have accrued over time. Once you know this amount, you can identify what payment method best fits you for paying off your card as soon as possible. 

In general, people recommend three principal methods to reduce your credit card debt.

The first strategy is to pay off the card with the lowest balance first. With this method, you make the minimum payment on all cards except the one on which you owe the least. You put all your extra funds into getting rid of that credit card debt. After that card is paid off, you add that card’s minimum balance to the amount you put against the card with the second-lowest balance every month. When that card is done, you repeat the process with each subsequent card until you are out of debt.

The next method involves making the minimum payment on each credit card you carry and then focusing your extra cash on paying off the card with the highest interest rate before the rest. Once that card is paid off, you move onto the card with the next highest interest rate. This method saves the most money over time because it eliminates the burden of paying a high interest rate each month. This may take more time than other strategies but ultimately will save on future finance charges accrued over time from an outstanding balance.

The last strategy is to choose the card with the highest credit utilization ratio and pay off that card first until it’s paid in full. The credit utilization ratio is the total amount of debt on the card divided by the maximum credit limit. Once this is paid off, you then move onto the next highest credit utilization ratio card until you pay it off in full. You then move through the rest of your cards in credit utilization order. This strategy may benefit you by increasing your credit score, which will allow you to borrow at lower interest rates.

In the end, it doesn’t matter which strategy you choose as long as you make a plan and aggressively follow it. Pick the one that fits you the best and stick with it.

Due Date

Knowing your credit card bill’s due date is critical for debt management. This is because one key to debt management is always to pay your credit card before the due date or on time. Credit card companies charge high fees for late payments and late payments can lead to more debt.

Additionally, late payments may affect your credit history which could make it difficult to get a mortgage or car loan in the future. Alternatively, when you pay on time, you improve your credit rating and build a good credit score for a future credit report.

If your current due date conflicts with that of other monthly bills, you can always contact your credit card issuer and see if they would be willing to change the date. Having your credit card payment due at a time other than when your rent or mortgage payment is due may help your cash flow and make you more successful at keeping up with your payment plan .

Payment Amount

Of course, the most important thing you can do to reduce your credit card debt is to pay more towards getting rid of it. It’s a good idea to have money earmarked for the minimum monthly payment each month and then use any extra funds for paying off the principal of your debt. Any time you have money that is not already allocated, you should put it towards your debt.

At the same time, you should also avoid using your credit card to make purchases if possible, especially on things that are unnecessary for basic living. This is not the time for impulse buys and taking on more debt.

The things that will take you the farthest in credit card debt management are consistency and determination. It’s easy to get discouraged when you owe money, but the truth of the matter is that you can get out of that debt with a plan, self-control, and discipline. Thus, make sure you pay your bill on time and in full whenever possible.

Interest Rate

Another option that is worth an attempt is to ask your credit card company to lower your interest rate. Indeed, people are often surprised to see how much they can reduce their interest rates by simply making one phone call and asking a few informed questions about current offers on the market.

Of course, your card issuer is under no obligation to do so, but it’s worth asking. And if they refuse, you are still no worse off than you were before.

They may say ‘yes’ because they don’t want you  shifting your credit card balances over to another financial institution’s credit cards because they don’t want to lose out on the interest they are getting from you. They may wisely decide that getting a lower interest payment every month is better than no interest at all.

From your perspective, a lower interest rate means less interest compounded over time and more savings for you.

Debt Consolidation

A final tool for credit card debt management is to transfer your balances to a lower interest rate card or to get a debt consolidation loan. This may be the answer, for example, if the terms of your current cards are too high and there’s no room for renegotiation. This provides a way to get an all-inclusive, fixed monthly payment for the duration of the loan.

Debt transfer and debt consolidation loans allow you to consolidate your high-interest rate credit cards into one low-interest rate vehicle, which can save you money on interest charges in the long run. If you can bring multiple cards under a single payment with a lower interest rate, this may make it easier to pay off the credit card balances.

Debt consolidation loans are personal loans that can take a load off your shoulders when it comes to those monthly bills. They can also make living with debt just that little bit more manageable. The interest rates for these types of loans are usually lower than your credit card’s, which helps both short-term and long-term budgeting plans get back on track.

With all this in mind, it’s clear why such loans are becoming a top choice among consumers facing unmanageable credit card balances.

Credit Cards And Credit Card Debt

It can be difficult to manage your credit card debt. However, there are many benefits to doing so: you’ll have more money in the long run, you’ll sleep better at night, and it will improve your financial journey.

The bottom line is for you to find ways to implement these changes into your life in ways that work for you.

Leave a Comment