Statistics show that consumer credit card spending is down. This might appear to be a good thing, but consumers could be missing out on many of the better benefits credit cards offer by abstaining from their use.
Recent consumer reports show that credit card use is down for the second straight month; this despite the summer vacation season being in full swing. With back-to-school spending on the verge of pocketbooks across the country financially-struggling Americans are concerned about getting too deep into debt. As the recession looms and the recovery slow on the take, this concern is quite warranted. Indeed, the numbers don’t lie: a recent Federal Reserve report demonstrates a decrease in consumer spending, down approximately 15 percent from the corresponding season in 2008 (from $1.03 trillion to $850.7 billion). Still, consumers may be missing out on some great credit card benefits that might be worth a slightly higher balance for the time being.
What’s more important, perhaps, could be that student loan debt is still on the rise; an interesting conundrum considering that college graduates are not finding jobs as easily as they once were. When you examine the overwhelming nature of student loans, it makes sense that many college students and new graduates are quite reluctant to take out any extra credit in fear that they will not be able to fulfill their responsibility.
Unfortunately for these college students – and thousands of other responsible consumers – there is a bevy of credit card benefits out there that they will never enjoy because of this restraint. If you have a good credit score, in fact, the benefits could be quite surprising. Roman Shteyn, co-founder of Credit-Land.com says:
I hear from people all the time who have paid off a chunk of debt or managed to raise a poor credit score and are now afraid to use their credit cards anymore. These people need to realize that just using a credit card isn’t going to put them back into debt or sink a credit score they worked hard to make excellent. In fact, they are losing out on great deals if they don’t use credit cards.
Indeed, this happens all the time. Many people build their way to a solid credit score and then get scared that taking out more credit will somehow create more problems or they’ll keep a steady credit history and refuse to expand their liability in fear that it will open them up to other issues. The truth is, however, that having a good credit score is the best time to take advantage of not only competitive interest rates but also auxiliary benefits that credit card companies only offer to high credit score customers. If you want to be among this demographic – and concurrently take advantage of superior benefits like frequent flyer miles, cash back benefits, zero-percent interest rates, and cash back bonuses – here are a few tips for staying on top of your credit.
First of all, it doesn’t matter how much credit you actually have if you always limit your use. Try to stay within ten percent of your available credit. If the total available credit on all of your credit cards is $8,000, for example, you should try to keep a balance of around $800 a month.
Secondly, pay off your balances in full every month before the due date. Nearly all credit cards offer an interest-free grace period that lets you avoid interest as long as you pay the balance in full. Usually this grace period is about 3 weeks. Limit your monthly purchases to what you can afford to pay every month and you’ll be able to do this just fine.
Finally, set up automatic payments whenever you can. Have automatic payments set up on your credit card (for monthly expenses like utilities, etc.) and then set up monthly payments from your checking account to pay off your credit card balance. This earns you rewards with very little effort and you’ll never spend more than you can afford.